Personal Finance Series: No 21 – Why Poor People Are the Most Generous

While people ponder if they are in the money out the money, thinking of investing to make money, or taking money out of 401k, chances are they are not always thinking about giving money away, or considering how much they should be gifting of their personal finance. Yet giving money, and gifting money are central personal finance behaviours because charities depend upon them. Churches and religious groups also depend upon them, and of course, children learn their basic financial skills, not from goal setting in school, but from the gift of pocket money. Of course, giving isn’t only about donating money – Christmas, Birthdays, and social occasions are all times when people spend their money on gifting – from expensive jewelry to inexpensive flowers and chocolates.

Giving: Charities

Marketing for charities is big business, and fundraisers have done a lot of behavioural research into why people give; from lobbying, publicity, advertising, and endorsements, these reasons are exploited to the full – and giving to charities is not always about the unselfish concern for others, or an inclination to help a fellow man.

People, poor and wealthy give for reasons that are both social and personal.

Giving: The Truth About What People Get When They Give

People mostly give in order to get something in return, and are not necessarily aware of that. They have social reasons for giving, like a desire to give back to the community, they have belief in a cause, feel a duty, follow a family tradition, or to remember a cherished loved one. Sometimes the desire is to impress others as a donor, act out personal values, or act as a change catalyst. Other reasons are deeply personal, in that people give because they are moved by an emotional story, they desire a reputation or leadership, they want attonement for a guilty conscience, or simply want to belong to a group.

Whatever the reason, people with the least money tend to be most generous proportionately with their giving money, than those with little.

Giving How to Become Enlightened

Becoming enlightened with money is to understand yourself, your lifestyle, your values and your spending habits. giving money away is an important part of becoming wealthy because it is attitudinally like planting a seed, because few people understand the power of sacrificial decision making regarding money. By understanding where the money comes from, and where the money goes to, collated and analysed by using personal finance budget software online, it is possible to understand your lifestyle spending by using a budget and a forecast. Setting aside a regular amount within this personal finance worksheet allows for an important part of feeling good in life – giving to others.

Giving: What Happens When Faith Clashes With Reality?

The chattering classes often discuss the plight of the poor and how to give them a fairer distribution of wealth. While this debate rages, proportionately the poor are busy maintaining their donations and gifting because of their faith in religious belief. Debt collection agencies often target religious donations as if it were disposable income – the inference being that they should be receiving it as a priority instead of the charity or recipients. What has become very clear, is that the act of giving produces the ‘warm glow’ effect in exactly the same way as faith – so there is an argument that giving is a priority in order to put lifes difficulties into perspective.

So, it seems that poor people are proportionately the most generous, but ‘poor’ is a relative term. One thing is very clear, however – giving money is very different from wasting money.

By using a personal finance system to regulated expenditure and modify spending desires, people can relax in the safety of knowing where their money is going to. This is most easily done with an online budget tracking software.

Personal Finance Series: No 26 – Why Financial Planners Ignore REAL Money

Personal Finance Planning: The Logical Advisor

They don’t get paid to care about you, think about you or deal with the real issues which are driving you – they get paid a commission on the movement of money and their advice is therefore product related not person related – even though it has to be done within an ethical code.

Few financial planning professionals understand the psychology of financial planning. However, because of the nature of the personal relationship between client and advisor, many advisors do actually care about the decisions their clients make, they often just lack the knowledge or skills to be able to change a client from an analytical, logical and mechanical decision making framework into an emotionally efficient one.

Without an immersion into the psychology of lifestyle choice, spending behaviour, and lifestage influences, the logical advisor is limited to assessment of monetary risk, of commission disclosure and rates of possible projections.

Financial planning is a heavily regulated industry, with regulated investment and lending products from mortgages, loans, investments, savings, wills, and property, all with a degree of government protection. People operating in this industry don’t need to hold a financial planning degree, but they do need financial planning certification.

They are not required by regulation to hold any expertise in understanding how R.E.A.L. money works, but the clever ones, the best ones, do.

Personal Finance Planning: R.E.A.L. Money Advisors

It is worth paying for knowledge and expertise in so many walks of life, in law, medicine, education and other areas of society, it is common to buy information and action advice. Logical Advisors look at growth charts, projection software, and rates of return – often failing to understand that R.E.A.L. money is Reactive, Emotional, Automatic, and Limbic, hence the mnemonic.

Advisors who understand this, clearly understand that money is often a substitute for other things, for love, power, success and good deeds, as well as highly charge flashpoints in relationships and personal self esteem. Real Money advisors are actually money coaches – handling the person AND the product.

Personal Finance Planning: A R.E.A.L. System

Real money can be coached or it can be self developed, most easily by following a simple system, as presented by personal finance budget software online

  1. Set your personal profile and understand your life stage
  2. Collate where the money comes from and convert it to a monthly equivalent
  3. Write down where the money goes to, again as monthly equivalents
  4. Analyse the balance between the two, choose different actions as appropriate
  5. Set some forward thinking money goals
  6. Build up a future picture of money movements and consequences, in a plan
  7. Track the plan

There is more than knowledge involved, and the value in planning builds confidence, convenience, and faster decisions when unexpected life events arrive. The gained skills in decision making, judgement, stress relief and self awareness all enrich other parts of life relationships at work and home.

The ultimate benefit of using personal finance budget software online, is a powerful attitude to life and change which is the very definition of financial planning success.