If you’ve been reading this blog over the last month, you know by now there are several things you should be doing if you want to one day have financial security for you and your family. In order to help reinforce those, let’s go over some habits you should not take up. If you recognize any of these in your own finances, get a plan going to counteract them. You’ll thank me later. You can also thank me now, though 🙂 If you want to.
Don’t keep an emergency fund
Bad things don’t happen to you. You’re too good for that crap. Unemployment, accidents, water heater explosions; all that stuff happens to other people, but not you. But really, when it rains, it pours. Without an emergency fund, you could be forced to rack up credit card debt, sell investments off at a bad time, or borrow against your home or retirement. Once you get into it, it can take years to dig yourself out. So start squirreling away as much as you can to build up your emergency fund until you have at least 3 months worth of your expenses. 6 months feels more comfortable to me, but start at 3.
Why waste your time budgeting? It’s too restrictive, too stressful, takes too much time and it’s so hard to keep to anyway. Well let me tell you what, son (or daughter). Restrictive is when your spending habits start to control you rather than the other way around. Stressful is realizing in your 50s that you should have started doing this in your 20s. I don’t pretend that sticking to your budget is easy every month, but it’s a practice that can mean the difference between a long and beautiful retirement and supplementing your social security checks with a part-time job as a Wal-Mart greeter. And if that doesn’t scare you, you’ve probably got more than budgeting to worry about.
Especially not when you’re young. That’s when you can have the most fun! All that time value of money stuff is for old people. They’re the ones telling you that you should save so you can have a better retirement and all that old people stuff. That’s lame. It’ll all work itself out. If your work offers you free money in a 401(k), what do you say? That’s right. What’s a 401(k)? Okay okay, now let’s stop being dumb. If you’re young and your company offers you free money to invest in a 401(k), TAKE THE MONEY! In order to get it, you have to put some in, but unless you have some serious financial obligations that would keep you from doing that, there is no excuse. Also look into other retirement accounts and, if you’re feeling brave, investment accounts. It’s better to have 40 years for your money to earn compounding interest than 10. Like millions of dollars better.
Ramen noodles. That’s all you need. At 12 cents a pop, you can that for breakfast, lunch and dinner, right? As budget-minded as that is, I’m a fan of the more expensive things like fruits and veggies and making things from scratch. When you eat unhealthy, your body becomes a ticking time bomb, just waiting to be diagnosed with things like diabetes, heart problems, high blood pressure, etc. Then you’re stuck paying for expensive meds and doctor visits. Lame. So eat healthy! As far as exercise goes, skip the gym membership unless you’re actually going to use it almost every day. That’s a moment that you need to be honest with yourself. I deceived myself into getting a gym membership once and it suuuucked. $30/month wasted. You can find things to do for free outside a gym.
Don’t teach your kids about money
It’s awkward to talk to your kids about money, especially when you aren’t the best example. They’ll figure things out themselves when they’re grown up. Your parents didn’t talk to you about money and you turned out fine, right? That may be, but have you seen the shows your kids watch these days? And I’m not talking about just the teenagers. Check out the Disney Channel and all you see is a bunch of whiny brats who get whatever they want from their rich parents. For the love of all that is good on this earth, teach your kids the reality of money and hard work. If they never learn it, you may end up providing what I like to call Economic Out-Patient Care AKA they live in your basement or you’re constantly sending them money into their 30s, 40s and maybe even 50s. I’ve seen it, and it’s heartbreaking to see parents feel trapped by it.
If you enjoyed this post, there’s more to come tomorrow…