Larry Winget: Control your personal economy

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PHOENIX – With the stock market swinging wildly, dropping 600 points one day and gaining more than 400 the next and then plunging again after that, many people are worried about protecting their families when the economy is so unstable and the future uncertain.

One of the questions swirling around the ongoing market volatility is “How did we get in this mess?”

Author Larry Winget, aka The Pitbull of Personal Development®, says that’s the wrong question.

“It doesn’t matter,” he said. “That is absolutely the wrong question. The true question everybody should be asking themselves is, ‘What am I going to do about this?’”

There are two important pieces inherent in that question – personal responsibility and the recognition of the need to take action.

“Take responsibility for the action you’re going to take – that’s the question,” Winget said. “What everybody needs to do is go back to that old advice. You need to plan. You need to adjust your spending. You’re going to have to sacrifice. That’s what it comes down to.”

Winget says the first step is to track your spending – every penny.

“Everybody spends a certain amount of their money in a stupid way,” he said. “When you stop to get gas and you run in and buy a Slurpee®, that might have been a stupid way to spend your money at that time.

“Track your money and at the end of the week or the end of the month, you’ll find you’ve got a lot of money was just spent stupidly. Stop doing that.”

Once you know how you spend your money, it’s time to make some adjustments. While there are some obvious places where you simply can’t cut – necessities of life – there usually are some areas where you can scale back. That’s generally where the sacrifice comes in.

“The sad thing is that as a society, we’ve been told you can have it all,” Winget said. “No, you can’t. You’re going to have to choose.”

Having a realistic budget is essential. That means you have to know exactly how much you owe, to whom, when it’s due and how you spend your money.

“If you’ve got a lot of spare cash, this is a great time to invest,” Winget said. “The average guy is not in that position. … Just take a deep breath and ride this thing out.”

The best thing anyone can do right now is be smart and get control of his or her own finances.

“You can’t control the economy. Stop trying,” Winget explained. “Control your personal economy. You can do that.”

Winget said open communication about finances can be good in family, teaching kids to make smart choices. While you don’t want to make them worry, it can be beneficial for them to learn how to get through tough times. The key is to stick with facts, not emotions.

“Once you figure it out on paper, there’s nothing wrong with saying [to your kids], ‘Look, times are tough. They’re not like they used to be. We’re all going to have to sacrifice and we’re going to ask you to do your part, too.’”

The basic rule is this – spend less money than you make. That’s what it boils down to.

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