Finance

Margin is an alternative way to communicate “space.” Remember when the English teacher ruined your life by announcing that you must hand write a two page composition? She would say, “Be sure to avoid writing in the “margins.” In other words, it was important to maintain appropriate spacing. The same is true for your finances. Financial margin creates space in your life. During this series, I’ll be focusing on the real and emotional effects of living WITH and WITHOUT financial margin. Ready?

PART ONE – LESS STRESS

PART TWO – FREEDOM 
When financial margin is established, it provides a sense of freedom! I know that when we finally established some beginner margin in 2003, it was like scales fell from our eyes. We saw life in an entirely new light! Instead of wasting tons of energy determining how each bill was going to be paid (anyone who has lived paycheck-to-paycheck KNOWS the energy this takes!), we began looking forward. It allowed us to start asking new questions like:

• How much should we save each month for our children’s college?
• Any question that starts with “I wonder what would happen if … ?”
• Who can we bless this month?
• How can we use our gifts and talents in the most impactful way?

When we established margin, I discovered the freedom of knowing that I could pursue a dream! It did not matter as much if I really did pursue the dream – what mattered most was the fact that I could pursue the dream! I’m not sure this really makes much sense, but knowing that fact was incredible. Let me share a few examples to better explain this. I am entrepreneurial by nature. This means I love starting things. When I was broke and living paycheck-to-paycheck, the option to start a business or new venture was out of the question. Financial margin gave me the freedom to consider the options without being overcome by the fear of living in a cardboard box.

Here’s another example. When I took the leap of faith to go on staff at NewSpring Church, a church Jenn and I were a part of starting and LOVE being a part of, I took a massive pay cut. Jenn was able to make the decision to work or continue to be a stay-at-home mother without really having to worry about the financial aspects. This was only possible because we had financial margin.   How many people can take a 50% pay cut and still have this option available to them? Not many, but I will tell you with 100-percent confidence that those who have established financial margin CAN – and that FREEDOM to choose is incredible!

If you have no financial margin, make a decision to start building it today! If you do have financial margin, celebrate the fact that you have made the necessary choices to establish it and then use that freedom to pursue a dream!

Margin is an alternative way to communicate “space.” Remember when the English teacher ruined your life by announcing that you must hand write a two page composition? She would say, “Be sure to avoid writing in the “margins.” In other words, it was important to maintain appropriate spacing. The same is true for your finances. Financial margin creates space in your life. During this series, I’ll be focusing on the real and emotional effects of living WITH and WITHOUT financial margin. Ready?

PART ONE – LESS STRESS 
I still remember the day that my family first established financial margin. It was in February 2003 and we had just received our tax refund. Instead of immediately using this money, we put it into our savings account. This meant that we were not able to attack debt with this money, but our eyes had been opened to the need of establishing financial margin. Depositing the check into our savings account was incredible, but it was the emotional feeling that surprised me! We were able to breathe in a way we had never breathed before. I’m talking about literally being able to breathe differently. With that one key decision, we eliminated a load of stress that we did not even realize was there.

Gone were the days of fearing the question, “What will happen next?” Over were the days of stating, “How in the world will we pay for THAT?” Instead of dreading the clunking sound coming out of the dryer, we could simply say, “Appliances break. Let’s purchase a new one – with our financial margin money.”

STRESS! It is the #1 reason why most people want to meet with a financial coach. The stress of living with no financial margin can lead to a lot of effects:

• Fear
• Depression
• Feelings of dread
• Marital discord (or even divorce)
• Anger
• Combativeness
• Snappy responses
• Impatience
• Frustration
• Feelings of scarcity/lack
• Craving
• Unfulfilled

Having money is certainly not the answer to all of life’s issues, but the establishment of some financial margin certainly goes a long way toward easing many of the struggles of daily life! I definitely know that is true in my own life.

With all of the negative consequences related to living life with no margin, is it not worth the effort it will take to establish some financial margin? I recommend starting with at least one month’s of expenses. Saving one month of expenses allows you to manage your finances with a monthly budget, even if you are paid at some other frequency. It won’t happen overnight, but it can happen faster than you ever thought!

As I described in my book, Oxen: The Key to an Abundant Harvest, you truly begin winning with money when your “money makes money for you”.

With that said, here’s a great question to ask yourself: “How much interest is my bank paying me for the money in my savings account?”

Chances are high that the number is 0.01%. In fact, I checked several large banks and here’s what I found for their basic savings accounts:

• Bank of America – 0.01%
• Wells Fargo – 0.01%
• Bank of the West – 0.01%-0.02% (Depending on the state you live in)

This is why I hold all of my business and personal savings in ONLINE BANKS. This is not a “bank with website access”. They are banks that exist almost exclusively online. Since they do not have physical buildings, they have to do extraordinary things to attract customers, like offer higher interest rates. You can check out my top 5 reasons why I use online banks HERE.

Let’s look at an example. Let’s say you put $2,500 (one month’s of expenses – Rung 2 of the IWBNIN Ladder) into a savings account today. In one year you could earn almost $25.00 in interest from an online bank vs. $0.25 from one of the large banks. I’d say that’s a great deal! Now that might not seem like a significant amount of money to you but it’s free money and every little bit helps! Also, remember this is your savings account, not an investment account.

With this information, I’d encourage you to do 2 things:

1. Find out how much interest your bank is currently paying on your savings.
2. Check out the online banks that we recommend HERE.

Well we have officially entered graduation season! Students are graduating from both high schools and colleges all over the country. This is an extremely exciting time in ones life, but it can also come with lots of questions. I’ve written a book that’s specifically for high school students, college students and twenty-somethings – What Everyone Should Know About Money Before They Enter The Real World. So many of us have experienced a time where we have learned a financial principle or tool and said, “I wish I had learned that before I entered the real world”. One of these questions is in regards to credit scores.

I wanted to share with you an excerpt from my book that addresses the subject of credit scores.

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Everyone Should Know About Money Before They Enter The Real World:

What number is a good credit score?
According to Fair Isaac, a credit score can range from 300 to 850. The higher the score, the lower the risk. This means you want a higher number.

Companies establish their own criteria as to which credit score is a good credit score. As a general rule, any FICO score greater than 750 is an excellent credit score. Anything more than 800 is considered outstanding. As credit scores drift into the 600 range, credit might still be available, but it will come at a higher cost. Credit scores in the 500 range might prevent you from obtaining reasonable lending rates and terms.

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Learn more about the book and order your copy HERE.

Well we have officially entered graduation season! Students are graduating from both high schools and colleges all over the country. This is an extremely exciting time in ones life, but it can also come with lots of questions. I’ve written a book that’s specifically for high school students, college students and twenty-somethings – What Everyone Should Know About Money Before They Enter The Real World. So many of us have experienced a time where we have learned a financial principle or tool and said, “I wish I had learned that before I entered the real world”. One of these questions is in regards to credit scores.

I wanted to share with you an excerpt from my book that addresses the subject of credit scores.

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Everyone Should Know About Money Before They Enter The Real World:

Your credit score will have an impact on your life.
Credit scores are a measure of one’s ability to manage debt. The dominant credit scoring system which is used by most lenders was created by Fair Isaac. This system provides a measure of an individual’s credit worthiness and is commonly known as a FICO Score.

A credit score impacts many things. It determines whether or not you can obtain a loan. If you qualify for a loan, the credit score dictates the interest rate charged.

Credit scores also impact insurability. When you obtain auto, renter’s or homeowner’s insurance, the credit score directly impacts the insurance cost. The lower your credit score, the higher the insurance premium will cost. I have seen insurance premiums doubled because of poor credit.

Credit scores also impact the ability to obtain a cell phone contract or an apartment lease. It can affect utility connections. Utility providers usually require much larger deposits from people who have low credit scores. If you have an excellent credit score, a deposit might be waived entirely.   Credit scores can even impact your ability to obtain a job.

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More about the subject of credit scores, in my next post! Stay tuned!

Learn more about the book and order your copy HERE.