Let’s get down to basics for a moment. In order to achieve financial security (assuming you didn’t marry “well” and you’re not going to inherit a bundle of money) you have to save money and invest it wisely. Alas, many of us have trouble with that first step – saving. Yet I need not remind you how crucial it is and the longer you wait to begin saving at a hefty level, the harder it will be for you to achieve financial security. On the other hand, it can get depressing when you hear people like me say you should be saving perhaps 15% of your income, particularly if you’re having trouble saving anything at all or you’re just saving a smidgen.
Don’t despair. Start saving a small percentage of your income right now or if you’re already saving a small amount, increase it a bit. Saving anything, even 1% of your income, will get you started. Chances are that you’ll never miss the money, particularly if you have it automatically taken out of your paycheck or your checking account. On top of that, you’ll like the feeling of saving now for a more secure financial future. You’ll want to do more in the future, so it will be just a matter of time before you’re saving a healthy portion of your income. But you must take that first step. Do it today.
If you have young adults or even not-so-young adults in your family who are having difficulty saving, please share these thoughts with them. If you can spare some money, help them jumpstart their savings, perhaps with a modest Roth IRA contribution. Then hope they get the hint.
Smart Money Tips
- Speak with your spouse or significant other about family money matters. Usually, one partner in the relationship pretty much controls the family finances. This is not necessarily a problem, but it is important for the other spouse or partner to know what’s going on and where important documents are kept. This is essential in the event the spouse who controls the family purse suddenly becomes unable to do so. But it is also important for both to be involved so that concern or resentment doesn’t build up in the less-involved partner.
- Buy used cars. Most cars will serve their owners well for many years. If you really need to replace your iron and plastic master, consider a used car, despite today’s high prices for used vehicles. Cars depreciate in value substantially in just the first couple of years, as do the insurance premiums. According to a car ownership study I conducted several years ago, the most cost-effective way to own a reliable car is to buy a 4-year-old car and keep it for 4 years or more.
Food for Thought
Buy when you are scared to death; sell when you are tickled to death.
Money Can Be Funny
Nothing is more admirable than the fortitude with which millionaires tolerate the disadvantages of their wealth.
-Rex Stout
Word of the Week
exoteric (ex·o·ter·ic) adjective – Suitable for the public; hence, pretty obvious (roughly the opposite of esoteric).
Origin: From Latin exotericus; from Greek exōterikos, literally, external
Particularly useful if you want to insult someone without their realizing it, as: I am taken by your exoteric interpretation of current economic conditions.