One of the first things financial planners suggest we do with our money—once we’re beyond the basics of getting our regular bills paid–is set some solid goals. For instance, is one of your goals to save up for a down payment on a house? Invest enough for a comfortable retirement? Save for college for your kids?
I’m a big fan of goals. Setting future targets for my money helps me prioritize my current spending. For instance, if I know retirement is a goal (um, yes, a major one!), I make it a priority to have a certain dollar amount, or percentage of my earnings, whisked out of my bank account every month and invested in my retirement plan. (I like to have it done automatically, so I don’t forget to do it. It’s also a little less painful that way.) Likewise, if college savings for your kids are a goal, you’ll want to earmark some money each month and deposit in an account like a 529 college savings plan.
Financial goals simply help you create a path today toward your future wants and needs.
However, financial goals can also be a huge source of stress for many of us. We know what we’d like to be able to afford in the future, but sometimes we just don’t have enough money to cover all those goals right now. For instance, you may do a pretty good job of saving for retirement, and putting money into an emergency fund for things like a car break-down or basement water leak, but that’s about it. You’d like to be able to save for college, or set aside money for a bigger house, but it just isn’t going to happen. There’s not enough money to cover those goals and live your life today.
It’s such an easy thing to do, especially when you’re feeling uncomfortable about your own money life.
You look at a coworker who dresses snappily and talks about his second home and think: Why don’t I have all that? Is he making a lot more money than I am? Or you see a neighbor driving her shiny new car into the driveway and assume she’s rolling in dough and stock options.
Or it could be “financial peace” you’re after: You have friends who seem so calm and confident about working toward financial goals like paying for their kids’ college, or socking away money for retirement. You think: They must really have it all together. Why can’t I seem to save as much as they do?
The result of both money-acquisition or financial-peace envy is really the same: You feel disappointed. You become fearful that you’ll never “get ahead.” You worry that somehow you’ve made mistakes and “everyone else” knows secrets about making and keeping money that you’ve missed. Sound familiar?
The truth: You can never compare your financial life to someone else’s.
Who doesn’t? They’re hip, sleek and full of fun apps. And Apple has done a great job of convincing us that they’re better, easier, faster than most smartphones on the market.
But truthfully, I don’t actually need an iPhone.
Of course, that hasn’t stopped me from looking. And from trying to convince myself that I actually do need this phone.
I’ve pored over the different monthly plan options. I’ve considered a prepaid plan to save money. That means I’d need to pay the full, hefty price (over $600) of the iPhone myself (it’s more expensive without a contract-plan provider subsidizing it).
But I still don’t need it. At least not now. There are rumors that later this year, Apple will begin offering a less expensive iPhone (around $30) geared to cheapskates like me. If I can justify it, I’ll reconsider the phone then.
In the meantime, here’s my thinking. (And as always, your situation will be different from mine).
- I work from home. I’m usually within an arm’s length of both my computer and my phone.
- When I run errands or go to meetings, I’m rarely gone for more than an hour or two. Do I really need to check email or surf the Web during that time? Probably not. I can live without full connectivity for a couple of hours. I used to do so all the time. It’s the product manufacturers that have made “always accessible” an expectation in today’s world.
- I have a cell phone. It does those major tasks like, you know, make and receive calls and texts. Granted, it’s got a pull-out keyboard and looks like it belongs to a teenager (um, because it’s my teenage daughter’s old one, which is better than my old phone that required three keyboard taps to create every letter of a text!). However, because I use it pretty sparingly, I rarely use more than $20 of prepaid minutes per month. The cheapest iPhone plan I’ve seen is closer to $45 per month—and it’s fairly limited.
- I have an iPod Touch. This great little gadget is like an iPhone without the phone. When I’m near WiFi, I can get online, download and use apps and do almost everything I could do with an iPhone. Since it’s two years old, it doesn’t have the voice-activated Siri function, and because it’s WiFi-only, it’s not always connected. But for that….
- I have a T-mobile hotspot. When I know I’ll be traveling or away from home a lot, I buy a month-long pass for this handy gadget. For $25, I get 1.5 GB of data (plenty for checking email, Web surfing, app use, etc.) for 30 days. I probably use the pass four times a year—when we take trips and during the holidays when I’m out shopping and want to do a lot of price comparisons. A plus: I can use the hotspot to safely connect my laptop when I’m working at coffee shops, so I don’t run the risks of sharing important data over public WiFi.
- I know how to read maps and download directions in advance. I almost wish I didn’t, because having turn-by-turn GPS is very appealing. But to be honest, I usually drive to the same places over and over. I already know how to get to those place. And when I go somewhere new, I can usually get directions before I leave home, or get WiFi long enough to check a map on my iPod Touch. Really, I’ve trashed all my major reasons for needing an iPhone.
If you’re an iPhone hold-out like me and many others—or you’re trying to justify any big purchase you’re not 100% sure about—trying pulling apart your reasons for buying it.
- Can you truly afford it?
- Are there cheaper work-arounds?
- Are there other ways you’d rather use your moolah instead?
- Could you wait just a little longer?
It’s not easy, but I’ll be waiting. At least until that cheaper iPhone comes out.
Photo by ColdSleeper.
One of the first tips I gleaned from money expert Suze Orman wasn’t about saving or spending. It was about giving. Her words have stayed with me for more than a decade—probably from when I read the first version of her book 9 Steps to Financial Freedom.
Orman talked about making a donation to her local public broadcasting station. This wasn’t while she was famous and wealthy, but back when she was young and struggling financially. Her point was that the act of giving gave her a lot of satisfaction—and a feeling of tremendous strength. By letting go of some of her money, she was signaling both to her penny-pinching self and the universe at large that she didn’t have to hold on so tight. If she let money go to a good cause, she felt confident it would also come back to her in other ways. (Looks like she was right!).
I still love that message. At the same time, giving to charity isn’t always easy. That’s especially true when you’re paying for childcare or tuition, dealing with a big mortgage, or generally just trying to get by financially. And doesn’t it sometimes seem that everyone you know is asking you to sponsor their cancer walk or buy wrapping paper to support their child’s school?
It’s great to help, but it’s also fair to set some limits so you don’t shortchange your own family budget. Today over at Equifax’s Family Money blog, I’m talking about ways to be generous when it seems like everyone you know is asking for charitable sponsorships or donations.
(Photo by embemama.)
Between my beloved Maps and Kindle reader apps (the ones I use most often!), I also have a few favorite money-related apps I tap regularly:
1Password. I seriously can’t live without this program and its related app. It’s my little version of financial peace of mind. 1Password helps me store the dozens of user names and passwords I’ve accumulated for bank, investment, and other online accounts. I used to keep all this critical info in a massive Word document. I password-protected the document. Then changed the password. Then forgot the password. I still get heartburn thinking about that day. Long story, but now I use 1Password and have many fewer financial panic attacks about my accounts’ safety and my stinky memory.
My Credit Union’s App. Specifically, its mobile-deposit app. I can take a picture of a check I need to deposit (front and back) and within seconds, it’s safe at my bank, available for use. No physical trip to the credit union required.
Evernote. OK, so Evernote’s not really a financial app. But I use it to keep track of things I’d like to purchase, make lists, jot down my kids’ clothing and shoe sizes—all things that help save me time and money when I’m out shopping.
Safeway App. As a Club Card member, I can load coupons directly to my account and check for “Just For U” personalized deals. I usually load those from my computer at home. However, if I forget, and I’m at the store and see a shelf tag that reminds me that this box of granola bars is free to “Just For U” members, I can quickly pull up the app and load the deal while I’m loading up my grocery cart.
Price-Comparison Scanners. Amazon Price Check, ShopSavvy and RedLaser all let you scan an item’s barcode while you’re out shopping to see if you can get a better deal locally or online. I often use more than one, because they can be a little glitchy. Or maybe it’s me. I’m often challenged to get the barcode flat, without glare, perfectly within the screen’s little parameters.
Savings Spree. I’m letting my youngest daughter test this one out, and it’s promising. Using a game-show format, this app from Money Savvy Generation (we love their segmented banks at our house), teaches kids about saving, earning, and handling spending pitfalls. Suggested for ages 7 and up. (Photo by Ian Lamont.)
I’m over at Equifax today, blogging about kids and summer work. My kids have done some kind of summer earning since they were about 8. Both have had stints as dog-walkers, plant-waterers and cat-feeders. But this year, we’re taking the idea of summer money a step further.
Over Spring Break this year, we road-tested a “pay for chores and goals” method I learned about from a couple of mom-blogs–71Toes and Five Kids…in Five Years. This method worked so well that we’re going to try it this summer.
The basic idea: Decide on a handful of daily summer tasks for which your kids will get paid. (Yep, just like they would for any real “job.”) The tasks can include at least one simple household chore, and then you can add a few more items that match your family’s priorities. Examples include a physical-exercise requirement; an academic task like doing 10 minutes of math or reading; and a personal goal, like practicing a musical instrument. The full handful of items shouldn’t take more than an hour a day. Most kids have plenty of “I-have-nothing-to-do” time in the summer, so an hour is not really a stretch. (Photo courtesy of Woodley Wonderworks.)
Read my whole post over at Equifax to see how this system works. I think it’s genius!
When you decide to work on improving your family’s financial picture, it’s easy to attempt too much, too fast.
Maybe you want to pay off several debts, cut your monthly spending on non-essentials, increase your retirement savings, or refinance your mortgage. You get all fired up, and put all of these tasks on your “to do” list. And you have the best of intentions to get them all done.
But as you get started, you’ll probably realize that each of these bigger tasks has lots of moving parts: Before you can pay off your debts, you have to free up some extra money to throw at them. So you start looking at your monthly expenditures, to see where you might be able to save a few bucks.
Say you decide to cut the cord on expensive cable and install an antenna to pick up local TV stations. That one choice leads you down a wormhole of other decisions: Where you will buy an antenna? How do you install it? Can you get all the TV shows your family loves with just an antenna, or will you need to consider adding viewing services like Netflix or Hulu?
By this point, you may be exhausted. You might actually end up ditching cable and installing the antenna, but then you lose steam. The debts you intended to pay off? Maybe next month. And the other stuff on your money to-do list? It’s hard to remember: What were those other things you intended to do, anyway?
The answer: Focus on one money “fix” at a time.
My 11-year-old daughter recently went on quite a spending spree.
She gets a very modest allowance—$6 a week. So when she got home from an outing with a friend and her nanny, I was surprised to see her plop a big bag of goodies on the kitchen counter. Among the loot: A bottle of kid perfume (strawberry gummy bear-scent, no less), some gaudy jewelry, several packs of gum, and a Claire’s makeup set with—I kid you not—64 shades of eye shadow! (Does anyone need that many colors, much less a tween?). Photo by pasukaru76.
We had a long, ahem, talk about her shopping trip. Her mall haul might seem typical for a young girl, but there were a few wrinkles. Our family rule is that our daughter only makes significant purchases she’s with us—not when she’s with someone else’s nanny. Also, our daughter isn’t allowed to wear or buy makeup yet. Finally, I knew she couldn’t afford what she bought.
It turns out that she emptied her piggybank without telling us. It’s a segmented one, with slots for spending, saving and donating. She took the money from every section and emptied it into her little polka-dotted purse.
I know fall is just beginning, but my mind is edging toward winter. Why? I’m reviewing our family savings and looking at how much we’ve saved to buy heating oil. (We still have an oil furnace). And I don’t want a repeat of what happened last winter.
There was a day, just before we hit a major cold snap, when I kept fiddling with our thermostat. The house just didn’t feel warm enough. I was pretty sure I heard the furnace running, so I adjusted the heat, put on a sweater and went on to other things.
I should have known better. It was a Saturday, and by 2 p.m. I realized the house was getting colder…and colder…and colder. We thought maybe our furnace was malfunctioning. But my hubby checked and we had run out of oil. Drats! (Photo by Carl Mueller)
Tags: oil heat
When our family recently traveled to England, we stayed in a rented flat part of the time instead of a hotel. It was a real apartment, so we cooked in the owner’s kitchen, learned how to turn on the boiler for hot shower water, and figured out how to use their TV remotes—and yep, it’s just as complicated in England as here, with multiple controllers. (Photo by Fang Gou)
Staying in someone else’s home made me wonder what it would be like if a visiting family stayed in our home. With all its little quirks.
I’d have to leave them a note about not using the front left burner on the stove. It goes from zero to scalding right away—nothing in between. Our family is used to that oddity and avoids using that burner. But visitors would need a warning. I’d also have to explain how to finesse our front door lock—it’s fussy. And how to turn one of the basement lights on and off by twisting the lightbulb in and out. Cuz the fixture and chain aren’t working right.
Do you put up will these little oddities in your house, too? Most of us do. So this month, why not fix a few of them?