The April 2017 issue of Kiplinger’s Personal Finance magazine recently arrived. It is a special one indeed: celebrating the 70^th anniversary of a venerable publication. To commemorate this occasion, the lead article is 70 Ways to Build Wealth. Definitely a worthwhile read for the Frugal and Wise. (Check for the issue at your local library.)

I am pleased to note that, of the 70 actions listed in the magazine, I have, to date, mentioned at least 19 of them on Frugal, Wealthy and Wise. Refer back to Twenty-five to Thrive, 31 Essential, Frugal and Wise Actions and Take These Five Actions Before Year-End.

I certainly cannot claim such ideas as original but neither did I merely copy them from other sources. Any number of fundamental, financial actions can lead to building wealth and living better on less. But there is the satisfaction in knowing what I mention on Frugal, Wealthy and Wise is also being espoused by such a prominent source as Kiplinger’s.

I have been reading Kiplinger’s Personal Finance for at least two decades. It has been influential in my journey towards being a savvy consumer, a shrewd manager of family finances and a builder of wealth. (Kiplinger’s Personal Finance and The Economist are the only two magazines I read.) The introductory rate for a year’s subscription is $15 or less – worth checking out; see if it earns its keep for you.

Words from the Chief

The 70 Ways to Build Wealth article contains 10 saying from Knight Kiplinger, Editor in Chief (page 28). These sayings are comparable to words of wisdom from Warren Buffet, Jack Bogel – or even King Solomon in Proverbs.

1) Wealth creation isn’t a matter of what you earn. It’s how much you save.

2) Your biggest barrier to becoming rich is living like you’re rich before you are.

3) Pay yourself first.

4) No one ever got into trouble by borrowing too little.

5) Conspicuous consumption will make you inconspicuously poor.

6) The key to stock market success isn’t your timing in the market. It’s your time in the market – the longer the better.

7) Diversify, because every asset has its day in the sun – and its day in the doghouse.

8) Keep a cool head when others are losing theirs.

9) Money can’t buy happiness but it can make unhappiness easier to bear.

10) Sharing your wealth with others is more fun than spending it on yourself.

Cheers, Paul

© 2017 Paul J Reimold

Part 3 of 6

Here are Actions 12-16

12. Review last year’s expenditures – when it comes to managing your finances, it’s difficult to know where you’re going, when you don’t know where you’ve been. Tally up your spending activities from last year using records and statements. Which categories of spending ‘jump out’ at you? Where are opportunities to cut back? How much were you able to save? Don’t have any idea where your money went last year? Skip Immediately to #13 and get this year off to a good start!

13. Track expenses – tracking expenses is essential for taking control of your finances and planning for future. Do you need to keep such meticulous records that you know where every penny went? Well, no. But the more accuracy, the better. Recording expenses can take many forms: a notepad or journal, a spreadsheet, online (mint.com, budgetpulse.com), a PC program (Quicken, Microsoft Money) or any number of smartphone apps (Mint, GoodBudget, Mvelopes). Personally, I’m old school and use Microsoft Money. It was discontinued years ago but copies are still available on ebay and, it works fine installed on modern PCs. It fits my needs. I am also a little bit leery about keeping financial records in the cloud, or apps such as Mint that directly access accounts,. However, Mint is well regarded.

14. Set a budget – not to worry. Establishing a budget does not have to be as tedious and painful as you fear. Step one: begin by recording on-going, necessary monthly expenses: mortgages, loans, tuition, phone and internet. Step two: estimate variable expenses based on last year: auto repairs, gas, utilities, house maintenance. Step three: estimate necessities where there is leeway for spending, such as clothing and food – these are areas where spending can range from basic to lavish, from Mac’n’cheese to Porterhouse steaks. Step four: estimate spending for purely discretionary items: vacations, dining out, entertainment, hobbies. Add it all up and adjust the items in steps 3 and 4 to fit your income. Allow (plenty of) room for saving and giving.

15. Set goals for big-ticket items – some goals may have a timeline of decades (saving for retirement, attaining financial independence). Some last a decade or so (kids’ college education). Others are a few years or even months (replacing a car or appliance, home renovation, down payment on a house, a vacation.) Dream a little, but then prioritize. Evaluate the viability of your goals and what it takes to achieve them.

16. Set up automatic bill payment to save time and postage, avoid late fees – this action is as much about quality of life as it is about saving money. Life is simply too short to spend it writing checks and stuffing envelopes. Moreover, the cost of postage and stamps can really add up. Say you write 10 – 15 checks a month for recurring bills and donations. A first-class stamp is currently 47 cents. An individual check may cost 10 cents, or more. Altogether, you could needlessly be spending $60 – $100 on stamps and checks every year! Worse yet, what if you overlook or forget a payment and get socked with a late fee? Late payments can also adversely impact your credit score. Set up as many automatic payments as you can for (1) charitable donations, (2) utilities (3) internet and phone (4) credit cards (5) mortgages and loans (6) insurance (7) rent, (8) IRA and HSA contributions, and more.

All for now. Look for Actions 17 – 21 early next week. Cheers, Paul

© 2017 Paul J Reimold