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Payday Challenge #6: Get Minted

Save by Thomas Hawk
source: James Broad

According the country’s leading expert on wealthy households, Thomas J. Stanley, about 80 percent of the top 5 percent of wealthy households (about $1.5 million in net worth) are first-generation affluent. Meaning these households did not inherit any significant portion of their wealth. It was accumulated typically by investing in their own private businesses or the stock of publicly traded companies. How were millionaires able to allocate enough funds to investments that would allow them to become wealthy?

Millionaires (and those likely to become millioniaires) live on a budget.

For every 100 millionaires who do not budget, there are 120 who do have a budget. According to Stanley via his book The Millionaire Next Door, those who do not use an official budget, “create an artificial economic environment of scarcity for themselves and the members of their household”. (In other words, they adhere to an imaginary budget.) The millionaire non-budgeters employ the “pay-yourself-first” strategy. And both the millionaire budgeters and non-budgeters save at a minimum of 15% of their gross income and did so even before they were wealthy. Thus, the reason they became wealthy in the first place.

So you might think Payday Challenge #6 is create a budget. It isn’t. (But I’m giving myself away regarding a future PDC.) Instead it’s about setting you up with a tool to make budgeting easy. Payday Challenge #6 is “Get Minted”.

Mint.com is a financial aggregator and budgeting site owned by Intuit, Inc. makers of Quicken and Quickbooks. Although there are plenty of aggregators out there and many work well, I like Mint because a) it’s free, b) it offers a mobile app, also free and c) it offers tools many others do not. For instance, Mint allows users to compare their budgets and spending habits to the typical habits of its other nearly 3 million registered users by city, region, age and other demographic factors. Additionally, since Mint is a part of the Intuit family, its privacy and security measures are tops in the industry. All your information is encrypted.

I want you to use Mint and get familiar with it now because it is one of the best budgeting tools I have seen. You may be someone who has seen budgeting as a waste of time. Hopefully the information regarding millionaires’ budgeting habits will change your mind. Or perhaps you’ve tried to do it, but have not displayed the mental stamina to keep up with it. This tool, addresses both those dilemmas. After you have connected your financial accounts to the Mint website, you’re up and running in seconds.

Then there are those of you who are fastidious budgeters and are unwilling to change your system. “If it ain’t broke don’t fix it”. My parents, more specifically my mother (Yes, I’m calling you out ma!), fit this category. You may recall I wrote of them:

…on a teacher’s and painting contractor’s income, they have been able to save and invest where their capital will kick off enough income in retirement as they earned when they were working. They live modestly but do not need to. They could actually increase their lifestyle substantially if they wanted, but are satisfied making cookies with my daughters, their grandchildren, and going on the occasional vacation.

My parents have an elaborate paper system of shoe boxes, binders, check books, hand-written spreadsheets and envelopes that make up their budget. With such an elaborate system, it takes them and hour to account for a $5 purchase at the corner bagel shop. If my parents were to use Mint, it would essentially perform all those financial gyrations for them in the blink of an eye. Alas, I have not been able to convince my parents to “fix what ain’t broke” by adopting Mint. While their paper system gives them a sense of control over their budget, it is hardly efficient.

While I urge you to follow my parents’ example (and the example of the typical millionaire household) by actually having and following a budget, do not follow their lead regarding their system. Get Minted instead.


Market
Volatile Stocks to Leave Lasting Scars on Fund Investors’ Psyche” by Laura Keeley; Bloomberg

Cash holdings are at the highest levels since the record in March 2009… The average investor tends to hold large amounts of cash when the markets are at a low and thus miss out on gains, JPMorgan’s Andrew Goldberg said. The previous high of cash as a percentage of portfolios was in October 2002, right before the start of a five-year bull market.


Portfolio:
Two year chart of Coach (COH) vs. the iShares S&P 500 ETF (IVV)
Coach Declares Quarterly Cash Dividend , source: Coach, Inc.
Coach falls on worries rich will slow spending” by AP; Businessweek


Life:
Myth-Busting the Black Marriage ‘Crisis’” by Jenée Desmond-Harris; The Root
World of Class Warfare – Warren Buffett vs. Wealthy Conservatives” by The Daily Show with Jon Stewart

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