The Two Sides of Personal Finance - Offense and Defense
When I think about money management and this important life skill, I see two sides to the equation. There is the offensive side which includes earning (wages, salary, commissions, bonuses, etc.) and investing. Then there is the defensive side, which includes budgeting, saving and spending.
There are a lot of books, magazine articles and other materials out there on the topic of money, in fact, tons. That material is good and so important that I hope you consume much of it as well. This book is on the important subject of money and will bring significant value to you and your family. I am writing it because of my passion about the subject and my desire to help others become financially independent. I want to do my part to help my sons and others learn from my research and experience on this vitally important topic. I believe how I “packaged” the information about managing your personal finances will help you and your family not only learn fundamental techniques of managing your money but more importantly help you implement them and put them into daily practice throughout your life. Knowing proven techniques is not usually our problem, implementing and actively practicing those good habits is where we are challenged. Zig Ziglar states: “the best goals and personal philosophies will not work unless you do”. No matter how and where you play financial offense or earn your money, these defensive techniques are fundamental and therefore applicable to virtually every individual and every household. They are proven techniques that I and many others have used and will work for you if practiced with discipline.
The purpose of this book is to teach you eleven defensive, financial management techniques. This initial chapter, however, will briefly cover the offensive side of the personal finance equation or the way you make your money. The chapter will touch on offensive aspects to help lay the groundwork for the rest of the book. Again, there are other books, classes and seminars about how to earn and earn more. I believe most financial education is on that side of the money management equation, especially if you include how to invest your money once you have earned it. Maybe so much focus is on the offense because it’s more exciting, maybe because people feel that is the real path to wealth. In contrast, this book will focus on the defensive side of the equation, the side that will bring you long-term success in your personal finances. While financial offense can vary significantly between individuals, defense and the eleven financial techniques I will cover can be applied by everyone. Before we “go to class” on defense, let me share just a few thoughts on offense.
Your past decisions regarding education, job experience and your career path directly relates to your current earnings. Certainly, through additional education, experience and professional skill development you can change your future earnings. Jim Rohn, to me, said it best regarding one’s earnings. The money you earn is based on “the value you bring to the marketplace”. Your earnings are economic. Your earnings are not based on what a great person you are, your education or even your experience, but rather your earnings are based on how valuable you are, economically speaking, to the marketplace. Education absolutely will help get you in the door and help establish your initial income (see the statistics as the end of this chapter) but your actual performance on the job will determine how high you progress and your ultimate income. So if you want to earn more, then you have to perform well and figure a way for you to become more valuable to the marketplace. Increase your value by increasing your knowledge, your skills and your contributions. Again, this is not a book that will cover the offensive side of the money management equation but I just wanted to share that if you are not completely satisfied with your financial offense, it can be improved. If you want to improve it, analyze where you are at, where you want to be and take actions to close any gaps you find in that analysis. One of those actions could be to invest in my second book: The Coach 13 Skills to Enhance Your Career. That book is all about improving one’s professional skills and being more valuable to the marketplace. Some key concepts from that book include setting specific short and long-term career goals, almost always going the extra mile with your deliverables and life-long learning. These improvements take time, so be patient and be disciplined putting effort and energy into them daily. Others have increased their earning capabilities and you can too. Increase your earnings by increasing your economic value and contributions to your company, your customers and to the marketplace. However, earning more will not guarantee you winning the game of personal finance. There are many high earners who are not wealthy, their incomes are high, they look wealthy materialistically but financially that is not the case.
For the balance of this book, we will focus on the defensive side of this important, personal equation. How you plan, manage and ultimately save and spend your money is what I call the defensive side of the personal finance game. Regardless of what you earn, you can win the game of personal finance by understanding defensive fundamentals of money and practicing those fundamentals throughout your life. I have decided to convey my messages about winning at personal finances by using defensive football positions, therefore, there will be 11 financial management techniques shared in the following chapters. The 11 fundamentals are aligned with their most logical defensive position on a football team. I picked football positions because there is a more distinctive difference between offense and defense and I have 11 fundamentals I want to share with you. The 11 distinct defensive positions on a football team coincide perfectly with the financial information I will share with you in this book.