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3 Things Music Can Teach You About Money

3 Things Music Can Teach You About Money

While you may not think of turning to a musician for financial advice, music can teach us some interesting lessons about managing our finances.

As a life-long guitar player, I also play the financial calculator as a financial advisor/planner.  Though anyone would agree that being a musician and being a financial adviser are completely different career paths, I have come to the realization that the two are not that different after all.

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In fact, the habits that I have developed over the years as a guitarist have helped me enormously as a financial adviser, especially when interacting with my clients. There are three parallels I have found between learning to play an instrument and learning to successfully manage your finances:

Organization is a key factor in music and money

Think about a child banging on some kitchen pots or a jackhammer in the street. The erratic sounds can hardly be classified as music, because what distinguishes music from any other sound is organization. When someone decides to learn an instrument, they start by learning different scales, arpeggios, and chords. This system of organization enables them to transform haphazard noise into a unique and coherent piece of rhythm and melody.

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In the same way, successfully managing our finances must start with organization. Otherwise, without a good system in place, our financial life may look like haphazard decisions made based on fickle emotions rather than thoughtful planning. There are many various choices to be made when organizing your financial life, just as a musician has literally billions of patterns and combinations he could use to organize sound into music.

Tip to start organizing your finances: A simple way to start is to group your finances into smaller and more manageable units in the same way music is organized into scales, chords and arpeggios. For example, a group called Cash may consist of your cash flow, designed to track monthly cash surplus or cash deficit numbers. Giving could include your monthly charitable gifts. Time may include time based goals which may need funding such as a child going to college, or replacing your kitchen.

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Your music taste will dictate how you play, just as your personal values will dictate how you use your money

The musical preference of the musician will dictate the decisions that she makes while playing. For example, a flamenco guitarist and a rock guitarist use the same instrument to play, but their different musical tastes will determine which notes they use and which notes they leave out, their strumming technique, and the movement of their fingers along the fingerboard.

Similarly, a person’s financial decisions should reflect their personal values. A healthy financial life emerges when all of our financial decisions are in harmony with our personal values. For example, if you prioritize giving, you will be certain that your resources are set up in a way to share your wealth with family and perhaps get involved in philanthropic projects. While someone who prioritizes Risk above all may wish to maximize insurance coverage.

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Tip to start aligning your money with your values: Start by making a list of the things that you value most. Kind of like a “gratitude” list. Now take a good look at your financial life. Are your spending, saving, investing and making choices based on what matters most to you? Are there past decisions that you regret? Are there decisions that you keep putting off? What are the consequences if you take no action?

You can’t eliminate the financial aspect of risk, but it can be transferred to ease the blow

The best part of learning to play an instrument is getting to share the music with others. Yet there are inherent risks that come with playing for an audience. For example, during a guitar performance a string might pop, the guitar may go out of tune, or in a moment of panic the musician may forget the right chord to play. All these things are unplanned situations that will negatively impact the performance, but they shouldn’t make the musician fearful of playing. The musician cannot eliminate the risks, but they can mitigate them by placing an extra guitar on the stage, getting a digital tuner, or making sure they have a copy of the music handy.

Featured photo credit: Strum/Lucas Boesche via unsplash.com

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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