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| The Basics | It's not about money -- it's about power
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One dismal day, I had the realization of a lifetime: Having money means having choices and security. It's changed my life, and it can change yours.
By Liz Pulliam Weston
If you look, you can find just about everything you need to know about managing money somewhere on this site. Youll find columnists wholl tell you how to save, how to spend, how to invest, how to plan.
I do some of that, too -- but Ill also remind you why youre doing all of this in the first place.
The whole point of having money, and managing it well, is not to beat other investors by getting better returns. Its not about having the biggest house or the best toys. Its also not about depriving yourself of fun now for some vague future goal that might not even be important by the time you get there.
The whole point of money is something different. I learned about that one long-ago day in June in Anchorage, Alaska, of all places.
Bottomless wealth?
I was working as a newspaper reporter at the venerable Anchorage Times, the citys oldest newspaper and one whose owner was committed -- sometimes rabidly so -- to beating the rival Anchorage Daily News. Our little 35,000-circulation newspaper was rumored to be losing $1 million a month, but the owners fervor and great personal wealth seemed endless.
In fact, both had limits.
At 1 p.m. on a sunny June afternoon, our editors called an emergency newsroom meeting to tell us that this day would be the papers last.
People were stunned, gasping, crying. Two of my colleagues had been planning a wedding, while another had just bought a house. People had children, mortgages, ailing parents, car payments. What they didnt have, as the presses rolled for the last time, were jobs.
1992 was a terrible year to be out of work as a journalist. The nation was just wobbling out of recession, and papers all over the country were shutting down as publishers realized the remaining ad revenues couldnt support more than one newspaper in most towns.
In a crunch, crunching numbers
The rival News was unlikely to hire many of us, and the people we knew at other papers were either facing layoffs themselves or were swimming through reams of resumes from other desperate reporters. Things looked grim.
I decided to find out how grim the next morning, after watching the last press run and attending a boozy, weepy farewell party at the bar around the corner. I pulled out my bank statements and my bills and started crunching numbers.
Over the next hour, as I calculated and recalculated, a feeling of calm slowly stole over me.
If I made no changes in my lifestyle, I had enough money to live on for six months without even touching my retirement savings. If I made a few trims here and there -- ate out less, bought fewer shoes, maybe found a roommate -- I could make it for at least a year.
Its not as if I had been living especially frugally. I had some expensive habits, like travel, skiing and learning to fly a small airplane.
Three invaluable tenets
I had simply been following the advice handed down by my mother, a woman shaped by the Depression. Her mantras, repeated in word and in deed: live below your means, invest for the future, stay out of debt.
Thats what I had done, almost without thinking. I bought inexpensive cars and drove them for years. I paid off my credit cards every month. I put part of my paycheck aside for emergencies. I contributed to the 401(k) at work, even if I was a little fuzzy on where exactly my money was going. Those seemingly small actions, practiced throughout my 20s, resulted in a nest egg and a lifestyle that would see me through the bad times.
The sense of freedom and confidence I had that day, and in the days to come, drove home to me the real reason that learning to manage money carefully and well is so powerful. At what could have been the most stressful time in my life, I had choices and a sense of security.
Newfound interest in money
I was able to turn down a few jobs before being recruited by the Orange County Register in California. I traded the slushy streets of Anchorage for the ocean breezes and sunshine of Laguna Beach. At the Register, I covered politics for a couple of years before deciding to pursue my newfound interest in money and how it works.
Since my new boss was a whiz at personal finance, I took an investing class at the University of California-Irvines extension so I could keep up. In a few years, I had completed all the courses required to become a certified financial planner. I decided to remain a journalist instead, but the knowledge I gained was invaluable. My writing on personal finance eventually attracted the attention of the Los Angeles Times, where I worked for four years and for which I still write a Sunday column.
Although my knowledge has grown, my basic philosophy about money remains the same, shaped by that June day. Managing your money is not about deprivation or restriction. Its about using money as a tool to get where you really want to go. Its about being prepared for lifes inevitable setbacks, without clinging in fear to every dollar. Its about making choices so that you can have a good life -- one filled with possibilities, opportunities and fun.
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