By: Ron Blue– For years, I’ve taught that there are only five things anyone can do with money: save it, pay off debt, give it, pay taxes, or spend it on lifestyle. A few years ago, my good friend Mitch Anthony came up with a handy way to label the four uses of money:
LIVE: the money I live on
GIVE: the money I give away
OWE: the money I pay for debt and taxes
GROW: the money I save
I shared Mitch’s “live, give, owe, grow” rhyme with my wife, Judy. She loved it. She could easily remember it and the four uses I’d been teaching for years suddenly crystallized in her mind. Since then, I’ve been using the pie diagram with “live, give, owe, grow” to teach financial decision making. Reducing financial options down to five fundamental things that we can do with money simplifies our spending decisions. When we understand that there are only five pieces of the pie and every decision fits into one of those pieces, it simplifies our thinking. When we know that money can only go into one of the four wedges, we have more clarity to sort through priorities and make confident decisions. As we come to understand the pie and how it simplifies financial thinking, remember that there is only one pie in each of our lives.
The pie may be big or it may be small, but none of us have an “all you can eat” pie! Our individual pie represents all of the money we have to work with at any given time—no more and no less. Before online banking and the virtual disappearance of the paper check register, I had a client who added “deposits” to her register ($500, $1,000, $2,000 at a time) whenever the recorded balance threatened to fall below $0. The problem: she never actually deposited any real money into the bank. Writing money into the check register was her way of pretending there was more pieavailable than was reality. Her habit also became a source of great financial stress!
Most of us don’t blatantly treat our money like it grows on trees, but many of us do mental gymnastics to try to stretch the boundaries of the pie when they are, in fact, not elastic. Ignoring low balance alerts from the bank, putting “extras” on the credit card, and intending to save but never actually doing so are all ways of tricking ourselves into thinking the boundaries of the pie aren’t real. As I already said, it’s important to make peace with the limits of your pie—your financial reality—before you go trying to add more money to the mix with extra incomes or quick fixes. Being content with what you have is the starting point for sorting out your “simultaneous competing priorities.”
Adapted from Never Enough?, by Ron Blue and Karen Guess. © 2016 LifeWay Press. Used by permission.