Getting Back to Financial Basics– The Key to Developing Peace of Mind and Prosperity

April 20, 2009

mackey

By Mackey McNeill, CPA/PFS IAR, President and CEO, Mackey Advisors

If you are like me, you just want the recession to go away.  Enough already!  Yet as I rail against this downturn, when I pause, I see it as a “reset.”  We are long overdue for some of the changes we are now seeing in the marketplace. For example, exorbitant CEO compensation has continued its upward spiral since the 1970s.  Only in this economic downturn has some semblance of sanity returned.  Check out the New York Times piece that discusses a recent study documenting a decline in CEO pay and benefits.  And imagine this:  there is now a trend toward tying CEO compensation with company performance.  Hmmm.  Nothing new here to most of us.  This is how small businesses have always run.  Your company does well, you do well.  Run your company into the ground, you suffer.  This is a back to basics idea.

“Transparency” is the buzz word of the day.  In SRI (Socially Responsible Investing) circles, transparency is just another way of saying “let me see what you are doing.”  This too is an old idea, born again after the carnage on Wall Street, as those with a vested interest become more vigilant about whom is doing what, where and how.

Not so long ago, when we lived in smaller communities, one of the things that kept us accountable to each other was everybody knew each other.   The vast majority of us wouldn’t cheat or hurt our neighbor, the people we sat next to in church or temple every week or the people whose kids played ball with our kids.  Transparency is the new version of small town accountability.  Another back to basics idea. And while it is wonderful that the world is changing for the better, we all have to navigate the day-to-day challenges of this economic contraction on our net worth, cash management and business health.

To do so we need, back to basics ideas to implement in our own lives.  To that end, I have compiled a Top Ten Back to Basics Ideas, for both personal finance and your business, to keep you financially healthy during the recession.

Personal Finance

For now, set simple, achievable short term goals:

·      Update your Prosperity Plan™. If you don’t have one, make it a priority to create one. There is no better vehicle for peace of mind than a clear plan

·      Collaborate with your partner to create a realistic budget

·      Monitor your budget, making conservative adjustments as new challenges and opportunities arise

·      Monitor your cash flow

·      Engage in regular communication with your partner on all money matters

·      Avoid any unnecessary credit, especially revolving credit

·      Follow your investment plan. If you don’t have one, make it a priority to create one

·      Pick an area of finance that has always challenged you and make it a learning priority

            Explore new, fun ways to save money. For example:

·      cook at home

·      have friends over rather than go out to eat

·      get free movies from the library rather than renting one or going out

·      instead of a trip to the mall, make a trip to your local community park and appreciate all of the wildflowers coming into bloom

·      add some fancy, gently worn clothes to your wardrobe with a trip to Goodwill

·      take a kid fishing

·      start a small garden plot

·      sign up for weekly savings tips at www.feedthepig.org

These economic hard times shall pass.  In the meantime, use this time of recession as a reset button.  Reset your financial life to one that engages back to basics ideas to keep you financially healthy and poised for the recovery.

To learn more or to contact Mackey McNeill or to sign up for Mackey’s e-mail updates, visit: http://www.cultivatingprosperity.com/