Sunday, February 17, 2008

JWN: Your Money Story

What is your money story?

Since I was young, I have been sensitive to money and personal finance. It may stem from my childhood when my oldest brother Jack would scam me by trading me pennies for dimes saying, “This one is bigger.” Now he asks me for advice on his 401k.

How did it start?

One of the first books that really inspired my thought process towards business and finance was Rich Dad, Poor Dad by Robert Kiyosaki. It opened my mind up to what it means to be financially free. In essence, it boils down to this simple equation:

Investment Income / Total Expenses = Your Money Story

When the equation equals more than one, you are financially free. That is the situation you should strive to be in. At this point in time you have the opportunity to quit your day job, if you will.

What constitutes investment income?

1) Real estate income

2) Fixed income investments (bonds, etc.)

3) Dividends

4) Capital gains

What about those expenses?

1) Your rent

2) Food

3) Cable bill

4) Gas & Electric bill

5) Many, many more

I’ve taken a few steps to get my financial life under control starting with tracking my expenditures. When you do that you know where the money goes. That’s an important thing to know.

After tracking the money flow for a little while, you realize exactly how much you spend at the local McDonalds. What if you invested some of that money for a reasonable rate of return? Over 30 years, that’s a comfortable retirement versus a struggling one.

At the start you need to decide, what do you want your money story to be?

NOTABLE: Check out Pamela York Klainer’s book, How Much Is Enough? Harness the Power of Your Money Story. Pam is a friend and mentor of The VIP Guys. She is a great supporter of SUNY Geneseo; most notably by founding the Pamela York Klainer Center for Women in Business.

Once you make your goals and decide what it is in life that you NEED, you can start to make your money story come true. Do you want to just get by? Live comfortably? Or be wealthy?

I’m the latter. I have very high monetary goals for a variety of reasons. What’s important for me though may not be important to you. That’s the beauty of the money story. It is as individual as each of us.

Here are some key things for you to know for your money story:

1) Understand debt (credit cards, loans, etc.) Know what you’re paying in interest and please, always pay more then your minimum payment.

2) Rule of 72. Einstein’s most important find. Divide the number 72 by the interest rate you are earning on investments or paying on debt and you will have the time (in years) it will take that investment or debt to double.

3) You will work 80,000 hours in your life. Do what you enjoy. My father always says, “Do what you enjoy because you will get good at it. That will get recognized and you will get paid for it.”

4) Use a budget. Know what your obligations are and plan for them. Also, have a “savings” budget. Don’t just budget to get by.

5) Opportunity cost. Each expenditure you make is an investment in something. Are you investing in your belly? Or, your wallet?

Think about some of these concepts and set some goals for yourself. Money is arguably one of the most crucial aspects of our lives, so why not try to understand it? Robert Kiyosaki says, “There are only two money problems; too much money or too little. Which problem do you want?”

What’s your money story? ~JWN

Joseph W. Norman, Co-Founder and Editor in Chief of Notable and Newsworthy can be reached at or 607.743.8569. He offers speaking engagements and personal coaching and is always up for a "business lunch." To receive the weekly eZine, The VIP Profiles, email or visit