I wasn’t really sure what to call this post. I usually have a pretty clear idea from the get-go. But not this time.

My head is a jumble of thoughts and I hope to succinctly explain myself in this post.

One of the greatest challenges that we face as adults, and especially as parents, is learning to sacrifice our wants and desires for the sake of our family. I believe that the very act of having a child is one of the most selfless things that anyone can do.

However, it’s easy to make decisions subsequent to a child’s birth that are selfish in nature. Though, sometimes we don’t realize it because we tell ourselves that we are acting in our family’s best interest.

“If this works, we’ll make a ton of money and be able to get the kids anything.”

“But I enjoy it so much.”

The hardest decision I’ve ever made

As some of you know, I am going to MBA school this fall. I was very fortunate that two of the three schools I applied to accepted me. Both of them are excellent schools. Both of them offer a unique and valuable experience. But one of them would have satiated my pride. The other offered financial security.

I struggled day and night up until the deadline to make the decision. Ultimately, I had to realize that although both options were good options, the one offering security for my family was the better option.

And the amazing thing is that I haven’t really sacrificed. I’m going to an amazing school and will have my family by my side. Is there really anything else that matters?

So when is risk-taking the right decision?

I wish I knew the answer to this question. What I can tell you is when it’s not worth it.

• If someone’s life is put in jeopardy
  I had the awesome opportunity to go skydiving before I was married. I loved it! As newlyweds, my wife and I discussed our position on skydiving and other such high adventure sports. For us, we felt that the risk of death was too high. Once the kids are out of the house, then we can take more risks. So no skydiving for 20 years. I’m not saying that you shouldn’t skydive or do extreme sports. You just need to find a line or balance.
• If someone’s health is put in jeopardy
  I don’t think you can understand the value of health insurance until you have children. Dumb, unexpected things happen. Sometimes, a not so enjoyable job with good health insurance is worth the price.
• If your family’s finances are in jeopardy
  I’m a risk taker. My wife and I have started several companies (and spent a lot of money doing it). But we always maintained a source of income. We never became a burden for someone else to carry because we wanted to try an idea out. Let me be very clear. I’m not saying to never step out on a ledge and start something great. You just need to find that line between risk taking and stupid.

Is your spouse onboard with it?

If you haven’t guessed already, this post is really for husbands. Many of us have the good fortune of having a wonderful wife that supports us. What that unfortunately means is that, at times, women go along because they are so willing to sacrifice security for us men chasing our dreams.

If you decide to put some aspect of your family at risk, make sure that you truly have her support. Just because she says, “Go for it,” doesn’t mean that she isn’t screaming inside, “What the hell are you thinking?!”

I’ll be honest, I get pretty angry when I see people making selfish decisions that put wives and children at risk. I’m tempted to start screaming. But I’ll refrain and just blog about it. Hopefully, I’ll change some attitudes.

As anyone that has taken the GMAT can tell you, earning a high score is a lot of work. Scoring above a 700 (on a scale of 200-800) usually entails about 100 hours of study time. Of course, then there’s the actual test day. Basically, the test is four hours of just you, your brain, scratch paper, and the computer in front of you. You have no help or resources.

Out of this experience, I’ve learned several lessons that I believe are applicable throughout life in many different scenarios.

1) One failure is just that if you let be

I decided to take Kaplan’s Advanced Prep Course to help me prepare. As part of the course, I was able to take seven practice GMATs. On about test five, my score suddenly dropped. I found myself staring at a number that, in my mind, was not only unacceptable but a huge blow to my ego.

I began rationalizing the score as the result of my cold and a bad night’s sleep. Though within a few hours, doubts and fears began to creep into my mind. I found myself thinking, “Maybe you just can’t do it.”

Basically, I was forced to face a very real fear for me – the thought that I’m not good enough. Forty-eight hours later, I had to go back to class and keep learning. That moment was a pivotal moment for me. I had to answer questions like: Just how dedicated am I going to be? Can I achieve my goals? Will this test define me and my future?

I came to one simple conclusion – one failure is just that if I let it be that. Meaning, I could continue my defeatist internal rant and continue to underperform or I could let that one failure go, having learned from it, and move on.

Life is often this way. We have setbacks. In our mind’s eye, we watch a chain of events play out that leads to failure, pain, or disappointment. We then act on those fears and our subsequent actions are masochistic and detrimental. It’s at that moment that we have to decide how we will respond. Steven R. Covey preaches that we are responsible or “response able.” We have the right and power to decide how we will respond.

I choose to let one failure be just that.

2) Don’t let anxiety and fear change your method

As I prepared to take the GMAT, I learned techniques and methods to help guide my thinking so that I could efficiently determine the correct answer. With only four questions left on the whole test, my heart began to race. I realized that within just a few minutes, I would see my score. Months of preparation and countless hours of studying were culminating in this one moment.

I began to freak out.

I read the question and frantically looked at the answers trying to guess which one was right. Suddenly, I thought to myself, “What are you doing?! You have a method. Stick to the method. Don’t let the anxiety change your approach and cause you to guess when you can get the right answer by following the method.”

I calmed down a bit and followed my method. With each of the remaining questions, the anxiety remained. But I stuck to my method and confidently selected the answer choice that I felt was correct. And it worked. I earned a good score.

Again, life poses challenges. Some of them are horrific or emotionally devastating. But find your method and stick to it. Don’t let fear and anxiety change how you approach decisions and actions. Realize and accept that you are upset, afraid, or angry, and then consciously choose your course of action based on your method.

3) When it matters, it’s just you, your brain, and what’s in front of you

As I mentioned earlier, the only resource that you have during the test is your own brain. No calculators, no watches, no notes, not even gum. You have to face each question with the knowledge that you already possess. So preparation matters.

When faced with adversity and temptations in life, you may be able to call on others to help, but the ultimate decision and subsequent action is up to you. No one else can make it through this life for you. You have to stand up and be counted for yourself. But the weapon you have in your arsenal is preparation.

For example, I decided at a very young age that I would not drink or smoke. I have had more than one opportunity to do so in my life, but have never done it. The reason is that I had made the decision long before I was ever faced with the opportunity. So when a friend said, “Want a drink?” I didn’t have to decide what to do. I already had. So saying, “No,” was easy.

4) Do you have enough information to make a decision?

One of the question types in the math section of the GMAT is called Data Sufficiency. This special type of question tests whether or not you can determine if you have enough information to get a single, correct answer. So you don’t have to actually solve the problem. You just have to be able to say, “Yes, I could solve the problem with the information provided,” or “No, I need more information to solve the problem.”

How often do we pass judgments or make preliminary decisions based on insufficient information? Maybe you observe Coworker 1 lashing out at Coworker 2. Do you know what led up to the event? Maybe Coworker 2,  the “apparent” victim, was actually sexually harassing Coworker 1. But if you immediately reprimand Coworker 1 for lashing out, then you just made the wrong decision.

So have a checkpoint in your decision making process that says, “Do I have enough information to make a sound decision?”

5) Be proud of what you have accomplished

I’m a bit of a perfectionist. My GMAT score was 10 points shy of the target score that I set out to achieve. But my score is still good (90th percentile good). I was happy but still had disappointment in the back of my mind.

Fortunately, I have a loving wife and family and great friends. As I shared the results with them, they each congratulated me and helped me realize what I had accomplished. Now, don’t confuse what I’m saying with justifying pride or getting a big head over what you’ve done. But if you’ve put in the effort and stuck to your method, then be happy.

Preparing for and taking the GMAT was a great experience in my life. I learned a lot, not only about math and reasoning, but how to manage a situation. Hopefully, the life lessons that I discussed above can also help you.

I have two girls, two and one, and for Christmas this year, we talked about how we could help our two year old begin to understand what Christmas is actually about – and no it’s not about receiving gifts. No matter what your religion or beliefs are, Christmas is a time to think about things bigger than yourself. Christmas is a time to throw our inner-Scrooge out and help others.

Young children, though, are generally only exposed to the commercial Santa Claus story instead of the figure of a man determined to bring cheer and happiness to innocent and equally deserving children the world over. I largely place the blame at the feet of Hollywood (who lost its values long ago) and retailers. Please do not misunderstand me though. I have no problem with Hollywood and retailers trying to make money. However, profits do not incentivize them to create an accurate or compelling story of the true meaning of Christmas. That responsibility falls to parents, as it should.

To give you a few ideas, I’ve compiled a list of five activities to teach children how to appreciate Christmas and what it really means.

1) Earn money for gifts

Growing up, my siblings and I would go to Grandpa’s house and rank the leaves to earn $100 that was to be spent on buying Christmas gifts. First, there were a lot of leaves. I mean a lot. Second, raking those leaves are some of my fondest holiday memories. Even at a very young age, we helped in whatever way we were capable and were equally rewarded.

Earning money that I then exclusively spent on others was not something I did often. So having that experience each year gave me a nearly singular opportunity to develop an attitude of financial sacrifice. Also, I learned that Grandpa makes up the difference. The 5 year old was probably more trouble than help. And yet, he would receive as much compensation as the 9 year old and 12 year old. Why? Because Grandpa made up the difference by working a little harder. Wouldn’t this world be so much better if we all worked a little harder to make up the difference?

2) Create a Christmas budget

Once your children have earned money for Christmas gifts, have them create a Christmas budget. For example, have them create categories like Charity, Family, Friends, Schoolmates, etc. Within each category, list the names of everyone who will receive a gift. Last, place a dollar value next to each person’s name.

When picking the values, let your children do it. Hopefully, it doesn’t add up to the amount that they actually have to spend. Let me explain why I would hope that happens. If the amount does not add up, then you have the opportunity to talk about balancing a budget. So let’s say that your child has $100 to spend but wants to spend $150. Explain that the budget can’t exceed your income, or the $100. Then revise the budget together. I wish more adults had this skill.

3) Participate in a local charity program

As part of the budget, allocate a few dollars for a charity program in your area. You will probably need to add some money to the budget. Where I live, we have Sub-for-Santa and Angel Tree. Both programs allow you to go and buy gifts for a specific child or family. This year, we selected a two year old girl and had our two year old, Kennedy, help pick the gifts. We told her that she was giving presents to another little girl that was her “friend.” I’m not sure she fully understood, but will in time.

4) Volunteer time at a shelter

Okay, this one doesn’t really involve money unless you think time is money. Nevertheless, serving those less fortunate almost never fails to teach appreciation for the things and luxuries in one’s life. In fact, you may realize that having a pantry with food in it is considered a luxury in most parts of the world. Afterwords, talk about how being educated, getting a good job, and earning money allows us to help others.

5) Have them put Christmas money received as a gift in savings

If your kids receive money as a Christmas gift, have them put it in savings or open a savings account if they don’t have one yet. Make sure to make them a part of the entire process. Meaning, even have the four year old go in and hand the money to the teller. Have the nine year old fill out the deposit slip.

My cousins always had to put their Christmas money in savings while I was allowed to spend it all. Now, I wish that I would have been encouraged to save it, or at least most of it. I usually received sufficient toys from my family and the savings would have been helpful down the road.

What holiday traditions do you have to help teach your children about the true meaning of Christmas?

During my last year of college, my wife and I spent countless hours discussing how we intended to manage our finances. We spent a fair amount of time discussing our goals and what we needed to do in order to financially reach those goals. Fortunately or unfortunately, depending on how you look at it, we made some foolish investments at the same time.

Our eyes and desire to quickly reach our goals overrode all of those nagging feelings that were telling us, “This is stupid.” As a result, we created several boundaries to help guide future investment activities. Before I jump into the specific types of limits that you need, I want to briefly describe the importance of guidelines or boundaries.

Boundaries: The kite example

Think back to being a kid again and flying kites with your family and friends. If you were ever like me, then you occasionally wanted to let go of the kite’s string once it had reached the end. I believed that the tethered string was holding the kite back and not allowing it to soar higher into the sky. As you may know, if you let go of the string, then the kite may fly higher for a moment, but it inevitably always falls fast and crashes into the ground.

The string actually acted as an anchor and allowed the kite to stay its course and continue to fly. By removing the anchor, the kite is easily tossed about by the wind. Life is the same. We need boundaries in order to stay anchored and move in the right direction. Extrapolated to an investment scenario, creating written guidelines as part of an investment plan gives you an anchor which allows you to make smarter financial decisions and avoid being a reed that is tossed about in the winds of the market.

11 Essential guidelines for your investments

1. What are your liquidity needs? Different investment account types have different legal restrictions. For example, early withdrawal from a 401(k) or Roth IRA is not only a taxable event, but it carries a penalty with it. Take the time to understand when you intend to make major purchases, such as a care, additional education, or a home, and understand whether or not you will be able to access your invested money in order to meet your needs.
2. What is your investment time horizon? This guideline is closely tied to #1. Determine the date or year when you will need to access invested money. For long-term goals, instill now the mindset that those investments are long-term assets and unaccessible until that time. Writing this down helps deter the temptation to deviate from your plans.
3. What are your acceptable and unacceptable asset classes? Make a list of asset classes that you are comfortable investing in and a list of asset classes that you will not use. For example, my wife and I have as acceptable classes: bonds and cash, stocks and mutual funds, REITs, gold funds, and business holdings. Our unacceptable classes are: derivatives, collectibles, foreign currency, options, futures, or any other asset class where we have no discernible specific advantage. You may not agree with us, but have a rational reason for why you make something acceptable or unacceptable.
4. When are you willing to invest in individual assets? Individual assets are defined as stocks. As you begin investing, one bad stock can have a serious impact on your entire portfolio. So wait a while. My wife and I decided that until we have $500,000 in our portfolio, we will not invest in individual assets. And even then, we will still follow guidelines #5 and #6.
5. What percentage of your total assets can be placed in one investment? This guideline can make or break you. Even though an asset class is acceptable does not mean that you can go hog-wild. Restrict how much you will invest in any one investment as necessary. For example, our guideline states, “At no time will the Team invest more than 5% of its investable assets in any single company, stock, or individual investment except broad market mutual funds, index funds, or ETFs.”
6. What is the maximum percentage of your total assets that you will place in Company Stock? As you begin to add individual assets to your portfolio, don’t let Company Stock overwhelm your portfolio. We have all heard the horror stories about individuals who placed on their bets on the Company Stock. If your company gives you stock as part of your compensation, then great. But make sure you have a balanced portfolio.
7. What is the maximum percentage of your total assets that you will place in new investments? Carefully move into new investments. This guideline helps avoid “hot stock” tips and other tall tales heard on the back nine. Our investment plan states, “The Team will invest not more than 5% of the total portfolio amount in any new or individual asset or investment. Index funds, mutual funds and ETFs do not fall under this category unless they have portfolios with less than 50 assets.”
8. What is the maximum percentage of your total assets that you will place in unlisted investments? Unlisted investments are assets not listed on recognized stock exchanges and therefore bare additional risk. In order to limit that risk, I recommend allocating no more than 3% of your total portfolio to such investments.
9. Will you use leverage? Leverage comes in the form of short-selling or buying on margin. I’ve made and lost money using both techniques, but they add substantial risk if not properly managed. If you aren’t sure why, read 4 Reasons not to use debt to make an investment.
10. If applicable, how often will you discuss the performance of your portfolio as spouses? Keep your spouse informed about your portfolio. Or if you aren’t the one handling the finances, ask to be kept up-to-date. Even if you are inexperienced, two heads are still better than one.
11. How often will you rebalance your portfolio? Over time, certain assets will grow or fall faster than others. So you need to adjust your investment allocation to re-align it with your target allocation. So determine how often you need to that. Personally, I believe every two years is sufficient.

A sleep well investment portfolio

I like sleeping. I don’t get much of it these days. So having a portfolio that lets me sleep and doesn’t keep me up all night wondering whether or not my stocks are plummeting is important to my peace of mind and lifestyle.

Answering the above questions and then writing it down may take some time and seem mundane, but it is crucial to your success. Knowing where you are going (your goals) is not sufficient if you don’t know how you will safely arrive there (your boundaries).

Any other important guidelines that I may have missed? For more commentary and information, sign-up for our RSS Feed using your favorite reader.

Several months ago, the CEO of the company I work for sent out an email chastising many of the individuals in the company. Our current product had several design flaws that were creating problems for our customers and sales efforts. One of the issues was the mainboard in our device. An unknown engineering flaw relegated approximately $880,000 worth of inventory to shelves marked unusable. Desiring to move forward and forget the existing problems, many individuals internally were lobbying to design a completely new product. Our CEO’s rebuke effectively stated, “We need to stop looking for the next new and sexy thing and focus on fixing the existing problems.”

An Unlikely Champion

The overall tone of the email was frustration and I recall writing it off. In fact, most of us did write it off. However, the most unlikely of employees took that one line as a  call to action – a mantra really. Luis immigrated from Peru several years ago. Having earned a degree in engineering in Lima, Luis left behind him a successful company. Working as an hourly employee back in our repair shop, Luis approached his manager and asked what our CEO meant in his email. Our manager outlined several of the problems that our product was facing. A few days later, Luis asked his manager if he could please start a project aimed to recover the $880,000 worth of defective inventory. He was given permission.

While Luis worked, several of the high paid, American educated engineers poked fun at Luis’ efforts and repeatedly commented that there wasn’t a possible fix. Lucky for Luis, his English is pretty broken and I don’t think he understood the criticism.

Luis implemented a well designed, step-by-step approach to isolating the problem areas on the mainboard. He then analyzed later versions of the board that did not exhibit the same problems. Within just a few weeks, shy and quiet Luis produced the necessary fixes salvaging every single board! With an upgrade costing the company only a few dollars per board, hourly Luis saved the company almost $1 million. The salvaged inventory is now invaluable since it has already been paid for and can be sold in future devices that would have required purchasing new boards.

His Humble Report

In our mid-year review, Luis’ manager gave him ten minutes to explain to all of the department heads (including the doubting engineers) what he had done. Luis’ professionalism was simply astounding and earned him at least my greatest respects. Luis had spent time after hours preparing not only two slideshows outlining the problem, his process, and the solution, but Luis wrote a witty and well structured dialogue (even though he kept his head and voice low while presenting) and called our products a family. He described the need to help an ill member of the family and his determination to follow the counsel of our CEO. Previous to this presentation, none of us knew what had motivated Luis’ efforts.

The Fred…er, Luis Factor

Our mid-year review lasted two days and one evacuation due to a natural gas leak (the gas company 100 feet from our building told us it would be an hour before they could get to us?!). Out of countless presentations, numbers, analysis, strategic plans, and opinions, nothing struck me as hard as Luis’ simple act of championing a cause. I was immediately reminded of “The Fred Factor” authored by Mark Sanborn. Mark stated that our mission should be to:

“…continually create new value for those you live and work with through dedication, passion and creativity.”

The Fred in Mark’s book was a postal carrier dedicated to a sincere relationship with the individuals on his route. Luis is an hourly repair technician dedicated to finding solutions through creativity. Also, when we all shrugged off our CEO’s email as an emotional rant, Luis saw an opportunity to move the company forward. Imagine a world full of people like Fred and Luis. People who care about building relationships and working hard to achieve common goals. Imagine an entire company, charity, church group, or family full of people like that. And dare I say it…imagine a government full of people who aren’t politicians but relationship oriented champions of change dedicated to the common good and not personal agendas (and I’m talking to both parties). I’d like to live in that world.

Know any Luises yourself?

For my day job, I work at an aerospace firm. In order to receive all of my vacation time, I am required by my employer to continue educating myself through books, classes, seminars, training, etc. As a book lover, I generally fulfill this requirement through reading. Currently, I’m reading “All Marketers are Liars” by Seth Godin.

One of the main themes of the book is – you’re a liar. Don’t worry though, so am I. In fact, most people are liars. Satisfying some psychological need, we tell ourselves “stories” or lies about why a certain product or service will fulfill some deep rooted need. Unfortunately, we are generally meeting just a deep rooted want. For example, here’s a few excerpts from the book.

“Does it really matter that the $80,000 Porsche Cayenne and the $36,000 VW Touareg are virtually the same vehicle, made in the same factory? Or that your new laptop is not measurably faster in actual use than the one it replaced…Marketers profit because consumers buy what they want, not what they need. Needs are practical and objective, wants are irrational and subjective…

“Marketers aren’t liars. They are just storytellers. It’s the consumers who are liars. As consumers, we lie to ourselves every day. We lie to ourselves about what we wear, where we live, how we vote and what we do at work…This is a book about the psychology of satisfaction. I believe that people tell themselves stories and then work hard to make them true. I call a story that a consumer believes a lie.”

This habit of lying to ourselves threatens are financial stability. Instead of spending $5, we spend $20. Instead of recognizing that we want that new shirt, car, or fine dinner at a restaurant, we lie to ourselves until we are convinced that, for one reason or another, we need that new shirt, car, or fine dinner. The current credit crunch can partly be blamed on a nation full of liars who convinced themselves that a $500,000 home was necessary even though a $250,000 home was sufficient. We must learn to live within our income and that means, we must stop lying!

I’ve compiled a short list of ideas on how to stop lying to ourselves and face the truth when making purchase decisions.

1. Have and stick to a budget. Is this purchase in my budget? For example, my wife and I budget a certain amount each month to spend on clothing. We’ve both agreed that this amount is sufficient to meet our needs. We have set this amount before facing a purchase decision. If during the month we want to exceed the budget because Kohl’s is having a fantastic sale, then we are now lying to ourselves. We aren’t saving money by exceeding our budget during a sale. In fact, now I have to dip into savings to pay for my overspending.
2. Set a per purchase spending limit. A wise man said, “The four most caring words for those we love are ‘We can’t afford it.'” Take some time with your spouse to set what I call “What I can spend without having to ask my wife if it’s ok” spending limit. My wife and I have decided that neither one of us is allowed to spend more than $50 at any given time without calling and asking the other one if it’s okay (this does not apply to groceries). Let me tell you right now, my wife has stopped me from making a lot of unnecessary purchases by telling me, “We can’t afford it.” Even though we had a budget for the purchase, we still didn’t need it.
3. Replace bad habits with enjoyable, inexpensive activities. Shopping or overspending is a habit that we have likely formed over years. Since our brains are programmed to react in a certain way in specific situations, any change is met by resistance. The existing habit is simply more comfortable and natural. To help change your behavior, replace the bad habit with another activity. For example, instead of going to the mall to pass time, go to a local park with a soccer ball and spend some time with family or friends. Start or re-start a hobby. Your new hobby might even be a low cost home business where you make money! (For more ideas of this nature, visit The Digerati Life)
4. Make sure that the reason you tell yourself you are making the purchase and the reason you are making the purchase are the same. Ask yourself, “Why am I really making this purchase?” Am I buying this dress for my wife because I love her and want to show my appreciation, or am I trying to prove to her and the world that I am a good provider? We lie to ourselves to cover our true motives. If the real reason you are making a purchase isn’t in-line with your principles and budget, then don’t buy it.
5. Take stock of and enjoy everything that you already have. Develop gratitude for what you already have in your life. Purchasing new things is often a sign of ingratitude for what life has already afforded us or a sign that we feel deficient in some area.

Overcoming bad habits and addictions is a process that requires concerted effort. Face each day one at a time and stop lying to yourself! Don’t believe the story you’ve created in your mind that justifies unnecessary and financially harmful purchases.

(Also, I wrote a little while ago about two other principles that help put money into the right perspective)

This post was featured in the Carnival of Personal Finance #217 hosted by Almost Frugal.

My wife and I learned this lesson the hard way. Some time ago, we had the opportunity to make an investment in a start-up company that was hoping to go public. After considerable deliberation and time, we decided to go ahead and invest an amount that we were comfortable losing (at least that’s what we thought at the time). The promise of a big payoff was just too good to pass up. Within months, the company went bankrupt and we lost everything that we had invested.

I wasn’t sure what to take away from this experience until I was listening to a Goldman Sachs investment banker during a lecture series on financial planning. He asked the audience midway through his lecture, “What is the number one thing that you should consider when making an investment?” A few dozen hands went up and one student responded, “The return.” To our surprise, our lecturer said, “No.” Everyone’s hand went down. After coaxing us for a few more minutes, someone finally ventured, “Liquidity.” Again to our surprise, our lecturer said, “Bingo, that’s it.” He went on to tell us of an investment that he and his wife had made in the movie The Other Side of Heaven and how they had lost everything. The real kicker was that as they realized that the investment was beginning to slip away, there was nothing they could do to recuperate any portion of their money.

At that moment, I realized that the lesson I needed to learn from our attempt at a small fortune was that we should not make investments where we had no means to recuperate our money even if it was at a loss. We have since added an additional rule to our investment guide – every investment must offer liquidity. The average family does not need to take on that much risk. Although the opportunity for gain may be large, the financial risk associated with non-liquid investments outweighs the potential return. Don’t let greed get the best of you or your money. Had the investment that we made had some option to sell our shares, then we could have minimized our loss. However since we could not sell or transfer our shares, we lost everything.

There are many factors to consider when making an investment and maybe liquidity isn’t the leading one. However, make sure that you have an out, even if that out means at a loss, before investing your hard earned money. If you have no out, then there is probably somewhere better to put your money.

Steven R. Covey taught that we should focus on living a principle centered life. As we align our actions and purpose with correct principles, we set a firm foundation for success and happiness.

So what principles will help guide you through the financial jungle that affects our daily lives? Although the optimal number of principles that will best help you may vary, you should at least include two longstanding tenets of both religion and law.

The first principle is Stewardship. Whether through good fortune or the sweat of your own brow, you have a certain amount of financial assets. Your assets may include automobiles, money in the bank, investment accounts, real estate, or insurance policies, to name a few. No matter the amount of financial assets or the source (assuming legal means of course), you have the obligation to oversee your assets with responsibility. Considering your assets as the opportunity to act responsibly is acting as a good steward. The use of stewards is millennia old. Kings would place a steward over sections of their land and the corresponding subjects. Each steward held the responsibility to wisely use the resources over which he presided.

In today’s world, we are not assigned stewardships via a kingship, but by the very nature of having financial assets. Let me give you several examples.

In order to make this important paradigm shift, I have to fundamentally believe that the assets I have are not mine, but rather, have been loaned to me for a time and I have to use them wisely. This is why I always tell my wife, “I’m glad I don’t have billions of dollars. I don’t want to have to be responsible for appropriately handling all that money.” Most would probably disagree with me.

The second fundamental principle in building a secure financial house is Accountability. Under the premise that I am a steward over assets that I have been allowed to use for a time, I must answer to someone at some future moment. If you are a God fearing individual, then you may believe that all things are created by God and are therefore His. You will then have to answer before Him for how you handled the assets He loaned you during life. If you are not a God fearing individual, then you are a temporary being on this earth and share in the obligation to responsibly use its resources. Therefore, you will have to answer to society and your fellowman for how you handled the assets afforded you during your life. Did you prepare adequately for future financial events? Did you overextend yourself and require outside assistance? Were you generous with others and give back on a regular basis? How you answer those questions might give you some insight into what type of steward you are and how you would be judged today if held accountable for your decisions.

As I stated at the beginning, there are many principles that if practiced consistently will lead you to financial success. Among your governing principles should be the understanding that you are Steward over loaned goods and you will one day be held Accountable for the decisions that you make. Once you start making decisions around those two principles, you will find yourself seeing money as a privileged tool that enables success and freedom instead of a right that can be squandered.