I’m often asked by people what is the key to financial success. My work in financial planning over the decades, both in the media and working with families, has led me to believe that, if you must boil financial success down to a single “thing,” that thing is to “be happy with what you’ve got.” There is far too much preoccupation with money these days. Instead of obsessing over more money, everyone should be thinking of ways to do better with what they have. Too many people think they’ll be happier with more immediate indulgences like a fancier car, an imported kitchen, or a larger house. But if you can be happy with what you’ve got, you’ll find it a lot easier to achieve financial security – and raise financially responsible progeny. Life is a series of choices, and if you think you’re deprived of things, you’re going to want to acquire more things. More things won’t make you happier, but more things could put a dent in your financial future. Think back to when you were growing up. Your parents were probably pretty happy with what they had, and they probably had a lot less than you do now. So be happy with what you’ve got. That’s an attitude that transcends the generations and builds wealth.
Smart Money Tips
- Simplify your financial life. We talk about this often, but the point cannot be stressed enough. There are many things you can do to simplify your financial life. Start with minimizing the number of bank and investment accounts you have and opting to receive bank and brokerage statements electronically rather than by mail. Beyond this, there’s a lot more you can do to simplify your financial life, like opting for straightforward investments rather than the exotic investments that end up being a debacle for many investors – recall cryptocurrency woes and the illiquidity of some REITs (Real Estate Investment Trusts). Exchange-traded funds, index funds, and target date funds offer simplicity, as do straightforward, old-fashioned insurance policies and investments made in real estate you can see and touch. So, whenever you need to make a financial decision, look for simpler solutions first to better enhance your financial life later.
- Pay off your mortgage sooner rather than later. One of the best things you can do for your financial wellbeing is to pay off your mortgage before, or soon after, you retire. Owning a mortgage-free home will so improve your retirement budget that it will be hard not to be able to afford to retire. The problem is many homeowners used their homes as personal piggybanks by refinancing or taking home equity loans. But even if you have large balances, you can still shorten the time it takes to pay off the loans. For example, consider someone who has a $200,000 mortgage with 25 years remaining. Adding an extra $200 a month on top of the regular mortgage payment will shorten the mortgage payoff by a decade. In other words, it will be paid off in 15 years, rather than 25 – leaving more funds for living well in your retirement years.
Food for Thought
Money is what fueled the industrial society. But in the informational society, the fuel, the power, is knowledge. One has now come to see a new class structure divided by those who have information and those who must function out of ignorance. This new class has its power not from money, not from land, but from knowledge.
–John Kenneth Galbraith
Money Can Be Funny
A budget is a mathematical confirmation of your suspicions.
–A.A. Latimer
Word of the Week
nudiustertian (noo-deeyuhs-TUR-shuhn) – Of or related to the day before yesterday.
Origin: From the Latin phrase nudius tertius, literally “today the third day.” More specifically, nu = now, dius = day, and tertius = third. Coined by Nathaniel Ward in The Simple Cobler of Aggawam in America (1647)
The online merchants are indeed fast. My nudiustertian order for several items was just delivered.