How Old Is Your Money?
How old is your money?
I recently visited the Santa Rita winery in Chile, South America. There I learned about the winemaking process, tasted a few wines and laughed with friends. It was fantastic!
During the tour we descended into the cellar to see the oak barrels and neatly stacked bottles. Instead of being bottled and shipped soon after the fermentation process— to be aged in the truck on its way to you— the wines in the cellar are being saved for later. As they sit there for a few years, they get better. They also pay dividends to the winery, as they will sell for a lot more money.
I am a big fan of You Need A Budget, otherwise known as YNAB. This is software for your Mac, PC and smartphone to help you budget and keep track of your spending. I have been using it for about 1 ½ years; it is making a tremendous difference in my financial health; I’m getting control of my money!
YNAB teaches sound financial habits through webinars and podcasts. One recent podcast was about aging your money; it reminded me of the winery tour.
YWAB teaches four principles, one of which is to live on last month’s income. By using money that is at least 30 days old, you can break the cycle of living paycheck to paycheck. It may take a few months to reach this goal, but it is attainable if you work at it. Doing this has been very helpful and reduced my stress related to money.
In addition to living on last month’s income, I’m also putting more money into my older-age account, saving for a time when I will likely have to slow down. Like a well-aged wine, that “old” money will be sweet at a time when my earning power will likely be reduced. And over time, that money will be worth more because of the interest it earned.
Are you spending money as fast as you get it? Does it come in on Friday and is gone by Monday? Or worse, do you buy on credit? That is like trying to make wine before you’ve planted the grapes! Spending money you don’t have is pure speculation.
Break the cycle.
Check out the software and the philosophy behind YNAB. Take advantage of free online classes and give the system a try.
Do what you must to create a buffer between you and your money, and give some a chance to rest before you spend it.