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Some Ideas To Change How You Think About Money

Updated on December 8, 2009

Between work, school and friends, I've been talking a lot lately with people about ways to change the way we see money. Money means so many different things to people, for some it's security, for others a means to an end. One wonderful woman looks forward to getting enough money to be able to throw it in the streets. There's no realistic way to get around the need for money, but maybe we can all do with a few mental adjustments to help view it in a healthier way. This list is a compilation of some of the thoughts that have been kicked around. I hope they can be helpful.

  • Pay yourself first. When money comes in, whether is from a paycheck, alimony, income taxes, whatever, put 10% in savings until you have an emergency fund equal to three months worth of expenses. Once you have that emergency fund, put that 10% into paying off any debt you have in addition to the payments you’ve already been making. After that, put the first 10% into retirement accounts or investments. Make do with the other 90%, no matter what.
  • Consider pay increases, bonuses, tax returns, awards to be part of your savings, not an opportunity to splurge on that new dress or video game you’ve been eyeing.
  • Invest early and often. $100 invested at 8% for 50 years will be worth $4,690. $100 at 8% invested for 40 years will be worth $2,346. 10 extra years means twice as much money. Don’t put it off!
  • Buy and hold. You are not smart enough to time the market all the time. You may win some and lose some, but in the long run you will lose. And most day traders who jump in without years of experience and the knowledge end up losing more than their families can afford. Stay away unless you can afford to throw your money in the streets.
  • Don’t let stuff rule your life. If you are 25 years, that iNeedthisgadget you just bought for $399, would have been $8,700 when you retired. But at least 40 years from now you’ll still be using that iPhone, right? Right?
  • Don’t go into debt. If you go into debt, even if you manage to pay it all off someday, you will be starting out significantly behind even the laziest, slowest investor who never incurred debt in the first place. If you must go into debt, make sure it’s smart debt. Finance your house or education, not your dinner or your next oil change.
  • Get educated, and keep learning throughout your life. Education should be a lifelong process, even if you aren’t spending money to obtain it. Visit your library and read. Find websites that inform and stimulate, not just titillate.
  • You don’t need that. I told myself that I really needed a brushed nickel mortar and pestle for crushing spices. I didn’t. Every time you go shopping, write down anything you see that you NEED. Wait until the next time you go shopping to get it – because by then you’ll probably realize that you lived without it.
  • Getting married can be great for your financial life, double the income (assuming you both work), splitting the costs. Getting divorced can destroy it, for both spouses. Attorney and court costs, along with losing half your money and buying a second home in one year are a tough way to grow wealth.
  • Live somewhere with good public schools. Private schools are fine if you want it for religious or social reasons, but the simple fact is that you are paying for your child’s education twice: once in private school tuition, and once in taxes.

  • Complaining is counterproductive. Get over it and move on. All of the time most of us spend complaining is time that we could spend on a million different positive things: exercising, learning, playing, cooking, laughing… the list goes on and on.
  • Set goals and hold
  • You cannot overspend on your health. As Count Rugen says in the Princess Bride, but if you don’t have your health, you don’t have anything.
  • yourself to them. Whether they are financial, personal, or career, give yourself something to work toward, something to focus on, and you’ll be amazed at the results you can achieve. Just remember, half the battle is preparation. Going half-cocked into any venture is a sure recipe for disaster. Of course, knowing is the other half.
  • Athletic ability or musical talent or fantastic good looks are great ways to become wealthy. For the rest of us, brains will have to make up the difference.
  • Doing what you love is a good way to be happy. It is not always a good way to be rich. You don’t have to be rich to be happy, but not being rich doesn’t guarantee you’ll be happy, either. Do something you can tolerate for a job. Do something you love for a hobby.
  • Persistence is admirable…to a point. After that, it can become stupidity. After that, it can become dangerous. Only beat your head for so long.
  • Personal finance doesn’t have to be boring, but often it is, in part because a lot of it has been said before. But the reason it gets repeated is because the basics still hold true: never lend money to friends or family. Mutual fund performance is variable, but fees are forever. Dividends are cash in hand. Unrealized gains are just that – unrealized. If you don’t learn about taxes, you will pay for it dearly for your entire life.
  • Frugality does not mean spending ten hours sewing socks together that could be replaced for $8, or using a blend of ear wax, toothpaste and eggs to make homemade glue. Your time is every bit as valuable as your money, and both must be spent wisely.
  • Eating out is a lot of fun, and you pay a premium for that fun. If you ever doubt that, look at the cost of a six-pack of beer versus a single beer at a restaurant. Consider how much the restaurant charges for a side order of French fries, and then go see how much potatoes cost per pound. There is a labor cost to shopping for food, preparing it and cleaning up afterward that you avoid when you go out, but it’s not as much as you think.

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