What comes to mind when you hear the phrase “Sow a dime and reap a dollar”? Is it wheat farming and harvest yields? Or maybe planting seeds in a garden and picking the flowers? What about saving money in a high-yield account or limiting non-essential expenses? If you thought about all the above topics, you nailed the sweet spot of this site! Don’t get me wrong—in no way am I implying you’ll reap a reward equal to 10 times your effort. Rather, it’s a hybrid metaphor-adage for the great things that can be achieved with advanced preparation and dedication. In all seriousness, I believe you’ll be impressed how your overall life improves with the application of some simple, practical, and logical changes!
To provide a framework for why this is important and where we go from here, let’s first consider some financial statistics. Sometime in the last few weeks or months, you’ve surely read headlines like the following:
- X% of the population cannot cover a $Y emergency
- Only Z% of those surveyed passed a basic financial skills test
- Personal savings rate dropped from A% in 1970 to B% in 2020
- Credit card debt is at an all-time high of $C per household
Tens of thousands of these sensational headlines have been published over time, citing studies led by different organizations with varying agendas and degrees of funding. The more you read these articles, the more you will notice they tend to allude to a small handful of underlying issues. The problem with a significant portion of these articles is they rarely tell you the WHY to go along with the headline. As a society, we’re addicted to the headline—we just want the quick answer or the simple fix. Unfortunately, the headlines rarely offer the simple fix; they merely restate a known problem. For example, “The U.S. personal savings rate was 13.2% in 1970 and 7.6% in 2020”. That’s a staggering decrease in a span of 50 years, but WHY did it occur?
If you wanted to understand why these statistics are what they are, you might try a 5 Whys, root cause analysis, or another similar framework (there are a few simple examples below if you’re interested). However, in short, my general philosophy is people make poor personal finance choices because they do not have a basic financial toolkit full of skills, or do not know how to apply what financial skills they do have, to set themselves up for success. My experience with teaching and coaching is that people are more likely to understand and use information if I can show them relevant examples of how to apply the information—not just the theory behind it.
To that end, my goal is to reduce, or even eliminate, the intimidation surrounding money and personal finance by illustrating how significant progress can be made by taking just a few simple steps of your choosing. Hence, you can sow a dime by making a few behavioral changes and eventually reap a dollar in the form of life improvements and progress toward your goals.
I hope you will read the content on this site and take away new concepts and strategies to help advance you toward your personal financial goals—whatever they may be. There’s a depth and breadth of topics to address a wide array of situations, so hopefully you can find something that’s relevant to you. Most of what’s written herein is not complex and has been covered other places; however, my aim is to convey the simplicity and practicality involved in putting these changes into place permanently. Some of this information has been gleaned from my personal experiences, some from other peoples’ experiences, and some from research. In full disclosure, to put most of these concepts in place there is an up-front investment of time and energy required, but that investment will put you on a trajectory for financial freedom from fear of the unknown.
5 Whys Examples:
All three of these examples are built from the same initial scenario—living paycheck to paycheck. Each has a different progression to the root cause, but the underlying cause is the same!
- Ashley continually lives paycheck to paycheck
- Why? She pays 20% too much for rent relative to her income level
- Why? She justifies the high rent by citing the many attractive amenities at her apartment complex, even though she rarely takes advantage of them
- Why? She hides behind the fancy amenities to take attention away from the fact she never researched viable alternatives before (or since) choosing an apartment
- Why? She works 60 hours per week and chooses not to devote any free time to improving personal finances
- Why? She never learned basic financial principles and is intimidated by the thought of trying to learn them; or perhaps she is familiar with basic financial principles but believes the investment of time is too much cost and not enough benefit; or maybe she isn’t aware of how a few small changes can make a big difference
- Bart continually lives paycheck to paycheck
- Why? He’s always $200 or more short when paying bills and often skips paying some bills to catch up on others
- Why? He spends overspends on hobbies and entertainment, even though his critical living expenses (like housing, food, and transportation) consume more than 60% of his income
- Why? He never monitors his consolidated expenses to know exactly how much he spends on hobbies and entertainment or that he’s falling behind in the long-term
- Why? He believes his active social life is more important than personal finances
- Why? He never learned basic financial principles and is intimidated by the thought of trying to learn them; or perhaps he is familiar with basic financial principles but believes the investment of time is too much cost and not enough benefit; or maybe he isn’t aware of how a few small changes can make a big difference
- Christine continually lives paycheck to paycheck
- Why? She has $5,000 of medical debt from an emergency procedure she underwent last year in the hospital
- Why? She only makes the minimum payment of $250 each month as interest continues to accrue on the principal balance
- Why? She doesn’t understand the power of compounding interest
- Why? She finds personal finance boring and would rather ignore it
- Why? She never learned basic financial principles and is intimidated by the thought of trying to learn them; or perhaps she is familiar with basic financial principles but believes the investment of time is too much cost and not enough benefit; or maybe she isn’t aware of how a few small changes can make a big difference
