According to a recent Money Magazine article, American consumers have become deeply addicted to spending, running up ever higher debt levels in order to live in a fashion that is well beyond their means. The result is often unhappiness, financial difficulty, and in some cases financial ruin or broken homes. The good news is that despite these bleak trends, tools are available to help reverse, or altogether avoid, the downward cycle of debt, daily financial stress, and frustration.
In his new book, Money for Life: Budgeting Success and Financial Fitness in Just 12 Weeks($14.95 Dearborn, April 2004), author and business executive Steven B. Smith advocates a back-to-basics approach based on the age-old “envelopes” budgeting method to tackle spending management – the key to financial fitness. By taking readers on a financial journey via fictional characters, Ryan and Christine Richardson, Smith illustrates how anyone, regardless of household income, can use the principles of an envelope budgeting system to achieve financial freedom. In addition, he shows how today’s technology can improve the management of spending by increasing awareness of money earned, spent, and saved on a monthly, weekly and even a daily basis. Smith also introduces tools that will help readers to:
- Stop spending more than they make
- Plan for unexpected expenses, including emergencies
- Have money set aside before spending is required
- Implement a household budgeting system that will make communication about financial matters easy—even fun
- Stop accumulating debt and put a plan in place for debt elimination
- Successfully use credit cards without increasing debt
- Psychologically relate to money while living in an electronic, “cashless” society
“The ‘envelopes’ concept was proven years ago when people divided cash among paper envelopes dedicated to a house payment, groceries, utilities, vacation and so on,” he explains. “When people needed money, they took cash from the appropriate envelope. For example, when the grocery envelope was empty, they had to take money from other envelopes, or not buy groceries. They were constantly aware of how much money was left in each spending envelope, and how long it had to last. Knowing this, they were able to make informed spending decisions.”
Upon finishing the book, readers can immediately and easily implement the envelope system by using Mvelopes® Personal, a spending management tool for which a start-up CD is enclosed. “Many people find that there really is a way to regain control and achieve financial fitness, simply by managing how they spend their current income,” says Smith.
Steven B. Smith is chairman, president and chief executive officer of In2M Corporation, a financial software and services company that he co-founded. Before founding In2M in 1999, he participated in a broad range of business activities as a senior member of executive teams for successful private and public companies, including Megahertz, Floppy Copy and DeltaValve. He lives in Salt Lake City, with his wife and four children.
Money for Life ($14.95, 208 pages, paperback, ISBN: 0-7931-8793-1) is available at neighborhood and online booksellers or by calling 800-245-2665.