How to Make Better Financial Decisions
.How to Make Better Financial Decisions
By Barbara O’Neill on 1 November 2020
A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:
Concurrently: Saving for two or more financial goals at the same time.
Sequentially: Saving for one financial goal at a time in a series of steps.
Each method has its pros and cons. Here's how to decide which method is best for you.
How to Make Better Financial Decisions
By Barbara O’Neill on 1 November 2020
A key financial decision people struggle to make is how to allocate savings for multiple financial goals. Do you save for several goals at the same time or fund them one-by-one in a series of steps? Basically, there are two ways to approach financial goal-setting:
Concurrently: Saving for two or more financial goals at the same time.
Sequentially: Saving for one financial goal at a time in a series of steps.
Each method has its pros and cons. Here's how to decide which method is best for you.
Sequential goal-setting
Pros
You can focus intensely on one goal at a time and feel a sense of completion when each goal is achieved. It's also simpler to set up and manage single-goal savings than plans for multiple goals. You only need to set up and manage one account.
Cons
Compound interest is not retroactive. If it takes up to a decade to get around to long-term savings goals (e.g., funding a retirement savings plan), that's time that interest is not earned.
Concurrent goal-setting
Pros
Compound interest is not delayed on savings for goals that come later in life. The earlier money is set aside, the longer it can grow. Based on the Rule of 72, you can double a sum of money in nine years with an 8 percent average return. The earliest years of savings toward long-term goals are the most powerful ones.
To continue reading, please go to the original article here:
https://www.wisebread.com/how-to-make-better-financial-decisions
9 Money Hacks That Took Us From The Poorhouse To The Penthouse
.9 Money Hacks That Took Us From The Poorhouse To The Penthouse
By Mad Money Monster
You might not believe it, but not too long ago (think: a few years) we weren’t prioritizing our finances at all. In fact, not only were we not prioritizing our finances, we were spending money like we had an unlimited supply. Going out to eat a few times a week, spending whenever we felt like it, and dropping $150/month on cable was the norm.
That all changed when we nearly committed financial suicide by buying a house we couldn’t comfortably afford. After pulling our heads out of our butts, we decided we needed a financial reboot. So that’s exactly what we did. Here are 9 money hacks we adopted that are changing the course of our financial future!
1. Tracking Our Net Worth
Tracking our net worth was something we never did before committing to frugality and financial independence. Much to our surprise, tracking our net worth has been our single biggest motivator on this journey.
9 Money Hacks That Took Us From The Poorhouse To The Penthouse
By Mad Money Monster
You might not believe it, but not too long ago (think: a few years) we weren’t prioritizing our finances at all. In fact, not only were we not prioritizing our finances, we were spending money like we had an unlimited supply. Going out to eat a few times a week, spending whenever we felt like it, and dropping $150/month on cable was the norm.
That all changed when we nearly committed financial suicide by buying a house we couldn’t comfortably afford. After pulling our heads out of our butts, we decided we needed a financial reboot. So that’s exactly what we did. Here are 9 money hacks we adopted that are changing the course of our financial future!
1. Tracking Our Net Worth
Tracking our net worth was something we never did before committing to frugality and financial independence. Much to our surprise, tracking our net worth has been our single biggest motivator on this journey.
Whether you’re paying down debt or investing, your net worth will go up. This is especially motivating if your efforts are concentrated on debt repayment and you feel like you’re not making any progress.
In case you’re interested, we use Personal Capital to track our net worth. Not only is it easy to use, it’s also free. We like free.
2. Ditching The Gym
I ditched the gym for outdoor running and YouTube videos. And I must say, I have not been disappointed. It’s amazing how many free options there are on YouTube to stay fit.
I’ve been using high-intensity videos to cover cardio and strength training since we’ve been experiencing subzero temperatures in the northeast lately. Whatever you’re interested, YouTube has it.
3. Having Our Groceries Delivered
To continue reading, please go to the original article here:
Growing Up Poor Was My Single Biggest Financial Motivator
Growing Up Poor Was My Single Biggest Financial Motivator
By Mad Money Monster
It’s certainly no secret that I grew up poor. And when I say poor, I’m talking 8′ x 50′ trailer livin’ poor. Although I must admit, despite being poor, I never had to worry about having enough food or our home being warm in the winter. So, things could’ve been much worse. For all intents and purposes, though, my family was poor. I was poor. And THAT turned out to be my single biggest financial motivator.
It’s not every day that someone attributes growing up poor to financial success later in life. For me, I can say beyond a shadow of a doubt, that growing up poor had a positive impact on my childhood outlook that lasted long into my adult life…and continues to this day. Growing up in a trailer on the right side of the tracks afforded me some advantages that others in similar situations did not receive. I will own that and admit to it.
Growing Up Poor Was My Single Biggest Financial Motivator
By Mad Money Monster
It’s certainly no secret that I grew up poor. And when I say poor, I’m talking 8′ x 50′ trailer livin’ poor. Although I must admit, despite being poor, I never had to worry about having enough food or our home being warm in the winter. So, things could’ve been much worse. For all intents and purposes, though, my family was poor. I was poor. And THAT turned out to be my single biggest financial motivator.
It’s not every day that someone attributes growing up poor to financial success later in life. For me, I can say beyond a shadow of a doubt, that growing up poor had a positive impact on my childhood outlook that lasted long into my adult life…and continues to this day. Growing up in a trailer on the right side of the tracks afforded me some advantages that others in similar situations did not receive. I will own that and admit to it.
One advantage of the location of our trailer was being able to attend a good school district. Another advantage I enjoyed was having a stable, loving home life complete with 2 parents, 3 siblings, and a pet. My advantages allowed me to feel secure enough with my basic needs (food, shelter, etc.) to dream of a life in the distant future that did not so closely resemble the one I knew as a child.
But the disadvantages I experienced growing up in that trailer, were what really fueled my desire to chase a better life. My disadvantages motivated me to chase higher education and financial independence as an adult. And for that, I am thankful. Let me explain.
Disadvantages Of Growing Up Poor
Like I mentioned earlier, growing up poor was a fantastic motivator for me to chase my goals to live a life with more options but it certainly wasn’t without its limitations and disadvantages. Obviously, growing up poor meant we lived in a trailer and, socially speaking, that was the kiss of death for me as a child attending a highly-rated public school. I was different and I knew it. I can’t say I was teased, but based on what I gathered from society and media I knew I should be embarrassed. And I was.
In fact, I was embarrassed about living in a trailer as a child for decades into adulthood. It wasn’t until a few years ago when I started to pursue financial independence that I was able to own that piece of my life and talk about it freely with anyone.
Today, I am proud of my humble beginnings because that shaped the person I turned out to be. The biggest disadvantages I can recollect from growing up poor are listed below.
The Disadvantages I Experienced:
To continue reading, please go to the original article here:
https://madmoneymonster.com/2018/09/07/growing-up-poor-was-my-single-biggest-financial-motivator/
Master Money And Investing 101: Creating Ninja Wealth
.Master Money And Investing 101: Creating Ninja Wealth
By Billy B | Invest, Money
I remember when I used to feel inadequate about money and investing. I felt like I was floating in the middle of a dangerous ocean, with no wind in my sails, and I lost my direction home.
It was a helpless, scary feeling to know almost nothing about how to start investing, because I desperately wanted to master money, but I didn’t know where to start learning how to invest.
I always imagined life would be easier if I understood how to invest, and create money from money, but getting that knowledge felt so elusive. It felt like financial wisdom was reserved for a select club. Unless you were born into that club, or went to school for years to learn it, you’d forever be struggling money, while the few people who did understand money and investing would be passionately living their dream lives.
Master Money And Investing 101: Creating Ninja Wealth
By Billy B | Invest, Money
I remember when I used to feel inadequate about money and investing. I felt like I was floating in the middle of a dangerous ocean, with no wind in my sails, and I lost my direction home.
It was a helpless, scary feeling to know almost nothing about how to start investing, because I desperately wanted to master money, but I didn’t know where to start learning how to invest.
I always imagined life would be easier if I understood how to invest, and create money from money, but getting that knowledge felt so elusive. It felt like financial wisdom was reserved for a select club. Unless you were born into that club, or went to school for years to learn it, you’d forever be struggling money, while the few people who did understand money and investing would be passionately living their dream lives.
This story is about my road to learn how money and investing works. Once I began to learn, I stopped feeling lost and afraid. I started to feel empowered. Learning was the breeze that filled my sails. Learning helped me cross my ocean of challenges, and find my dream life on the other side.
This is how you start to learn to master money and investing:
It was three years ago when I realized something had to change with my limited understanding of money and investing. I was sick of feeling lost. I was in an Alpha Group with my wife (We’re now leaders), and our leader opened with a question to start the discussion.
“If you could have one super power, what would it be?” She asked,
A few ordinary answers flashed in my mind: Jedi mind powers. Ninja athletic skills. Wings to fly through the universe at the speed of light. Claws and strength like Wolverine. All really cool super powers.
But these answers felt too generic for me because I am a trail-blazer at heart. I tried to think deeper trying to find a unique answer that hadn’t been said before. My answer finally hit me. It was like a lightning bolt exploded in my mind when it was my turn to answer.
I spit the flaming-hot answer out of my mouth, “I wish I understood the art of finance better.” I said, “I wish I had financial wisdom as my super power, because I don’t understand it right now.”
To continue reading, please go to the original article here:
Wealthy Or Rich? Is There A Difference?
.Wealthy Or Rich? Is There A Difference?
By Billy B | Mind, Money
There is a massive difference between being rich and being wealthy. They are as different as living with, and without a heart. They may look like identical experiences on a spreadsheet, or from the outside looking in, but being rich and being wealthy, are two drastically different experiences.
I can remember the moment when I first noticed the difference between the two lifestyles, and the moment I chose the goal of building wealth in my life. I was at a Christian networking event I had been invited to. I am a sales person in my day job, so after engaging in small talk with a few strangers and looking for business, I found a table and waited for the speaker to take the stage.
My mind began to wander as I sat in the crowd, and I asked God: “Is selling all I am supposed to be doing with my life? Is sales my ultimate purpose in life? Are paychecks and weekends to be free all there is? Or is there more?”
I had no idea the speech I was about to hear would impact my views on the meaning of wealth forever.
Wealthy Or Rich? Is There A Difference?
By Billy B | Mind, Money
There is a massive difference between being rich and being wealthy. They are as different as living with, and without a heart. They may look like identical experiences on a spreadsheet, or from the outside looking in, but being rich and being wealthy, are two drastically different experiences.
I can remember the moment when I first noticed the difference between the two lifestyles, and the moment I chose the goal of building wealth in my life. I was at a Christian networking event I had been invited to. I am a sales person in my day job, so after engaging in small talk with a few strangers and looking for business, I found a table and waited for the speaker to take the stage.
My mind began to wander as I sat in the crowd, and I asked God: “Is selling all I am supposed to be doing with my life? Is sales my ultimate purpose in life? Are paychecks and weekends to be free all there is? Or is there more?” I had no idea the speech I was about to hear would impact my views on the meaning of wealth forever.
As the room filled to capacity, the speaker grabbed a microphone and finally walked up on the stage. His hair was grey, and he faced the crowd with the same smile I have when I feel humble and confident at the same time. I identified with him immediately. His speech began describing the early career years of his career.
“When I was younger, cockier, and didn’t know any better, I was so power hungry that I missed out on all the things I deem important to experiencing a fulfilling now.”
I liked the way he spoke. He was calm and confident. I felt his motivation was to teach and help, and not sell. I leaned back in my chair and listened deeper, like I was watching a theater performance unfold just for me.
“In my 20’s, through my 30’s, I only paid attention to the things I had to do to be promoted in the companies I worked for. I spent the majority of my young career competing against my peers and comparing my job status to the people I met. My entire self-worth was found in how high I was on the corporate ladder, and how many zeros were on my paycheck.”
“All my energy was solely focused on creating opportunities for bigger promotions, and inflating the ego that drove me. My entire life became a warped fantasy where I could one day stand on the mountain peak of power and prestige, and stare down at the world like I was above everyone else. This fantasy became the only happiness I knew. Being rich, and better off than everyone else, was the only dream I knew.”
To continue reading, please go to the original article here:
7 Wealth Building Tips Learned From Football
.7 Wealth Building Tips Learned From Football
By Billy B Mind, Money
I fell in love with NFL football 15 years ago, and it has inspired me in many ways on how to build wealth. Once I understood the mentality, strategy, and toughness it takes to win games on Sundays, I was hooked. A football game is much more than mindless buffalo-sized men running into each other. It is a beautiful chess match with human beings that move like coordinated pieces. Building wealth, like football, is a thinking person’s game. Here are seven secret wealth building tips I have found hidden inside the game of football:
1) Wealth Building Tip #1: Be Patient: Life is long. It’s Ok to make mistakes, and it takes a lot of plays to win the game and build your wealth. There are 60 minutes in a football game, and there’s 60+ years in a normal life. You don’t have to win or be perfect in the first quarter or half to win. Great football teams and players take their time, feel out the challenges that are coming at them, and then when they know what they’re doing, they strike to put points on the board.
7 Wealth Building Tips Learned From Football
By Billy B Mind, Money
I fell in love with NFL football 15 years ago, and it has inspired me in many ways on how to build wealth. Once I understood the mentality, strategy, and toughness it takes to win games on Sundays, I was hooked. A football game is much more than mindless buffalo-sized men running into each other. It is a beautiful chess match with human beings that move like coordinated pieces. Building wealth, like football, is a thinking person’s game. Here are seven secret wealth building tips I have found hidden inside the game of football:
1) Wealth Building Tip #1: Be Patient: Life is long. It’s Ok to make mistakes, and it takes a lot of plays to win the game and build your wealth. There are 60 minutes in a football game, and there’s 60+ years in a normal life. You don’t have to win or be perfect in the first quarter or half to win. Great football teams and players take their time, feel out the challenges that are coming at them, and then when they know what they’re doing, they strike to put points on the board.
Great wealth builders have the same mentality. They’re patient. They’re always learning, preparing, and planning for what’s coming ahead, and when they see opportunities to build wealth, they strike. Great NFL teams also make mistakes during a game, but they learn from them and come back to fight again. Financial mistakes happen to all of us. Learn from them. Don’t let your perfectionism get in the way. Then get back up, learn from the mistakes, and fight to do better next time.
2) Wealth Building Tip #2: It takes a team to win a championship, not just individual effort. Football teams win championships by using all 53 men that are on their rosters. Each player contributes different skills to create a powerful team that rises above the sum of their parts. Wealthy people think the same way. They are always looking to expand their network of skilled people who push, teach, and inspire them.
Happiness is not real unless shared with others. People who build wealth know how valuable relationships are in their life. It’s not about how smart, skilled, or strong you are as an individual. Building wealth is all about how smart, skilled, and strong your TEAM of friends around you is.
Wealthy people invest a large portion of their time building teams of awesome relationships who help inspire them to be better. Grow your network of friends to include incredible people who inspire you, and you will take a massive step forward on the path to build wealth.
To continue reading, please go to the original article here:
Inheritance Disputes: Avoiding The War When There’s A Will
.Inheritance Disputes: Avoiding The War When There’s A Will
By William Cowie | Published: 01 December 2015 – Updated: 20 October 2019
The holidays are upon us. It's the time of the year when family moves from the shadows of a busy life to the foreground. That probably makes it as good a time as any to consider one of the most difficult topics to discuss pertaining to family and finances — the subject of inheritances. Nobody wants to talk about it because it is inextricably linked with, well, death. Someone has to die for an inheritance to come about, and none of us enjoys looking a loved one in the eye and saying, “Hey loved one, you are going to go the way of all flesh soon, so can we talk about what you are going to leave behind?”
How Family Disputes Over Inheritances Arise
When a dispute arises over an inheritance, it can help to recognize some of the issues that might be contributing to the problem developing between family members — and there are a number of things to consider:
Inheritance Disputes: Avoiding The War When There’s A Will
By William Cowie | Published: 01 December 2015 – Updated: 20 October 2019
The holidays are upon us. It's the time of the year when family moves from the shadows of a busy life to the foreground. That probably makes it as good a time as any to consider one of the most difficult topics to discuss pertaining to family and finances — the subject of inheritances. Nobody wants to talk about it because it is inextricably linked with, well, death. Someone has to die for an inheritance to come about, and none of us enjoys looking a loved one in the eye and saying, “Hey loved one, you are going to go the way of all flesh soon, so can we talk about what you are going to leave behind?”
How Family Disputes Over Inheritances Arise
When a dispute arises over an inheritance, it can help to recognize some of the issues that might be contributing to the problem developing between family members — and there are a number of things to consider:
1. It's all about stuff: A rich person, according to the story, was being buried one day. At the graveside, two employees were musing over how much the curmudgeon left behind. A third joined the conversation. “How much do you think old Scrooge left behind?” one asked.
“Everything,” replied the newcomer.
It is true: We can take none of our stuff with us when the day comes that we, too, go the way of all flesh. Therefore, a will inevitably is about stuff (including money). In a family, when the parent is gone, their affection (or lack of it) is gone, their words and actions are gone … all that remains is some stuff they left behind.
2. The thought process: Soap operas are built around the conflicts arising from inheritances (of stuff). We have all seen the media headlines about bratty heirs contesting the will of a wealthy parent. But it's not just the wealthy who spar over these things — many permanent family rifts are caused by siblings arguing over who should have received what.
About the only thing my wife had her eye on when her mother passed away was one of those ancient, dusty sets of Encyclopedia Britannica, one where the latest miracle discovery seemed to be the light bulb. It is a lovely antique, makes a bookshelf look really classy … but is otherwise useless in every other way. Still, it's what she wanted and, when that set showed up on her brother's bookshelf, well, let's just say that it took a few years for that sense of unfairness to heal. The funny thing is that neither of us would have ever cracked the pages of that musty set — and nor did her brother. It was, quite simply, the thought of it.
To continue reading, please go to the original article here:
https://www.getrichslowly.org/inheritance-disputes-avoiding-the-war-when-theres-a-will/
Year-End Financial Review and Planning Checklist
.Year-End Financial Review and Planning Checklist
By Women Who Money Co-Founders, Amy Blacklock and Vicki Cook
As the weather turns colder and the daylight becomes shorter, you may be busy planning for the holiday season. But something else worth focusing your attention on during this season is your finances. Like your physical health, your financial health needs a check-up at least annually.
Before the year that’s been like no other winds down, take some time to check in on your financial matters.
Review the important items listed below to maintain or improve your financial wellness for the next year and beyond.
Year-End Financial Review and Planning Checklist
By Women Who Money Co-Founders, Amy Blacklock and Vicki Cook
As the weather turns colder and the daylight becomes shorter, you may be busy planning for the holiday season. But something else worth focusing your attention on during this season is your finances. Like your physical health, your financial health needs a check-up at least annually.
Before the year that’s been like no other winds down, take some time to check in on your financial matters.
Review the important items listed below to maintain or improve your financial wellness for the next year and beyond.
2020 Year-End Financial Review
A great place to begin is looking back over the year and assessing how well you stuck to your financial plans. Be sure to include your spouse or partner in these discussions! Remember, no one but you is grading how well you did this year, so be honest. Then, you can identify what does and doesn't work so you can keep moving forward.
So, as you consider the questions below, don’t just jot down a yes or no answer; also include reasons for why or why not.
Year-End Financial Review Checklist
Did you stick to your monthly budgets?
Was your financial mission statement top of mind when making financial decisions this year?
Did you follow your investment policy statement when the markets got crazy?
Were you able to meet your financial goals?
To continue reading, please go to the original article here:
https://womenwhomoney.com/year-end-financial-health-review-planning-checklist/
How Your Expectations Destroy Your Finances
.How Your Expectations Destroy Your Finances
By A Lawyer and Her Money October 6, 2020
Being bad at math is often used as an excuse to be bad with money. Never mind that one still needs to learn about and manage one’s own finances. Still, no matter how badly one’s math grades were – money is not about math; it’s about emotions and expectations. This is how expectations destroy finances.
How to Be Good at Math and Bad with Money
We equate being good with money with being good with math because there are numbers involved. But with online calculators, banking and Excel, it’s no longer necessary to do one’s own addition or subtraction.
Even if you don’t do the calculations, your bank will tell you if you’ve spent more money than you have. And if you spent too much, you don’t need math to keep you from spending more.
The problem is not knowing when the math doesn’t work out – it’s continuing to spend more than you can afford to. This is not a problem that can be solved with basic algebra.
How Your Expectations Destroy Your Finances
By A Lawyer and Her Money October 6, 2020
Being bad at math is often used as an excuse to be bad with money. Never mind that one still needs to learn about and manage one’s own finances. Still, no matter how badly one’s math grades were – money is not about math; it’s about emotions and expectations. This is how expectations destroy finances.
How to Be Good at Math and Bad with Money
We equate being good with money with being good with math because there are numbers involved. But with online calculators, banking and Excel, it’s no longer necessary to do one’s own addition or subtraction.
Even if you don’t do the calculations, your bank will tell you if you’ve spent more money than you have. And if you spent too much, you don’t need math to keep you from spending more.
The problem is not knowing when the math doesn’t work out – it’s continuing to spend more than you can afford to. This is not a problem that can be solved with basic algebra.
How to Be Bad at Math and Good with Money
In high school, I was very good at calculus but I tended to (and still tend to) make egregious errors in arithmetic. Self-awareness goes a long way though. I knew that the only reason I would need to use math in my finances is if I spent more than what was in my account. It didn’t matter if I got the end number right or not – it only mattered that the account had money still left in it.
I could have learned to be great at math and always spend just shy of what was in my account. Instead, my secret was that I spent far less than what I had in the bank. That way, I wouldn’t have to use any math at all. Lots of money minus not a lot of money equals no problem.
What Really Destroys Your Finances - Expectations
A law partner once told me that people can tolerate nearly any situation so long as they have notice of it. That is to say, if you match or exceed the expectations, people will be fairly satisfied. But once you drop even a little bit from one’s expectations, tempers flare.
If you think about it, everyone view life through the prism of their expectations. Some reviews of Pixar movies are lower those of trashy movies because the reviewers expected more. The FIRE Festival was mostly a scandal because it (fraudulently) failed to live up to the lofty expectations of its attendees. Marketing deals exclusively in the realm of expectations, usually subconsciously. When we buy this makeup, we are thinking of being as beautiful as the model in the ad. Visiting a staged house helps us envision what it would be like to live there. Vacation brochures make us feel like we will finally find inner peace in Tahiti. And then we buy, buy, buy, and we never get the perfect feeling shown in the advertising. And yet we continue to buy, chasing the next advertising promise.
To continue reading, please go to the original article here:
https://alawyerandhermoney.com/expectations-ruin-finances/#more-466
The Number You Can Afford to Lose
.The Number You Can Afford to Lose
By A Lawyer and Her Money December 1, 2020
My family got a $70 parking ticket on vacation in Canada. When she saw the ticket, my mom started cursing, yelling, and crying. This was shocking both because my mother has never been an emotionally effusive person and also because my parents are quite comfortable financially, having lived frugally their whole lives. This $70 fine was a number she could afford to lose with no repercussions and yet she acted as if it was a life-changing disaster.
The only thing that calmed her down was assuring her that Canadian police were unlikely to enforce the ticket (sorry, Canada). Still, the whole experience got me thinking, what’s the point in having money if you don’t feel the wealth emotionally? And how can you finally get that feeling of financial security?
The Number You Can Afford to Lose
By A Lawyer and Her Money December 1, 2020
My family got a $70 parking ticket on vacation in Canada. When she saw the ticket, my mom started cursing, yelling, and crying. This was shocking both because my mother has never been an emotionally effusive person and also because my parents are quite comfortable financially, having lived frugally their whole lives. This $70 fine was a number she could afford to lose with no repercussions and yet she acted as if it was a life-changing disaster.
The only thing that calmed her down was assuring her that Canadian police were unlikely to enforce the ticket (sorry, Canada). Still, the whole experience got me thinking, what’s the point in having money if you don’t feel the wealth emotionally? And how can you finally get that feeling of financial security?
The Number That You Can Afford to Lose
I came up with a concept that I call “the number that you can afford to lose.” This is an amount of money that you can lose for whatever reason, and it won’t detract from your life.
The point of knowing the number you can afford to lose is being able to differentiate between a catastrophic loss and an annoying one. Of course, when you’re starting out in your financial life, a $70 parking ticket could set off a cascade of events that ruins your life. Maybe paying the ticket means you’re late on rent, which means you get a late fee, and that fee leads to a payday loan to pay for groceries, etc. If a $70 fee could turn your life into a tailspin, you better park extra carefully.
When you gain more savings and have more stability in your career, you shouldn’t respond in the same way to a $70 fee as when you you had very little money. It’s always going to be annoying to get a parking ticket, but it’s important to realize that you can recover. And that means you don’t ruin your day or others.
Is this an Emergency Fund?
The number you can afford to lose as the opposite of an emergency fund. An emergency fund is the short-term money you keep around in case everything goes wrong. If you lose your job and can’t make any other money, that’s why you have an emergency fund. This is the money for worst-case scenarios, for security, for fear.
To continue reading, please go to the original article here:
Why So Much Financial Advice is Wrong
.Why So Much Financial Advice is Wrong
By A Lawyer and Her Money November 10, 2020
The internet is a strange and fascinating place. There is a wealth of information, but not all of it good. Lots of people write content just to sell you stuff. And others are just idiots.
Even good-hearted people trying to impart knowledge can only speak from their own experience. The decisions they made were “good decisions” because they worked out. That, however, doesn’t mean you can or should make the same decisions now that they made in the past.
As much as personal finance bloggers like to say that the path to riches is simple and straightforward, personal finance is personal. Most financial advice is wrong because it fails to take into account how different each person’s situation is and how fast the world is changing. No one’s experience is universal, and the lessons that worked for one person may work for others, but they also might not.
Why So Much Financial Advice is Wrong
By A Lawyer and Her Money November 10, 2020
The internet is a strange and fascinating place. There is a wealth of information, but not all of it good. Lots of people write content just to sell you stuff. And others are just idiots.
Even good-hearted people trying to impart knowledge can only speak from their own experience. The decisions they made were “good decisions” because they worked out. That, however, doesn’t mean you can or should make the same decisions now that they made in the past.
As much as personal finance bloggers like to say that the path to riches is simple and straightforward, personal finance is personal. Most financial advice is wrong because it fails to take into account how different each person’s situation is and how fast the world is changing. No one’s experience is universal, and the lessons that worked for one person may work for others, but they also might not.
The Role of Timing in My Financial Success
My high income is directly tied to attending law school. So I could write an article about how everyone can go to law school to get a high-paying job, right? No, because I know enough about the journey to know that my path was not guaranteed even when I did it, and that what I did back then might not make sense now.
My graduation timing was fortuitous. If I had graduated in 2010 or 2011, I would have graduated into an unexpected recession in the legal field. At that time, many graduates were unable to find any legal employment, let alone high-paying jobs. Research shows that graduates from those years are still lagging behind financially compared to graduates before and after the recession. But graduating earlier wouldn’t have solved that problem. Many who graduated in 2008 or 2009 were laid off early into their careers and may have struggled to find another job after that.
Instead, I graduated in 2012, which showed vast improvements in job prospects over the 2010-2011 graduates. Furthermore, because we stared in 2009, we all already knew that the job market was difficult and were going in eyes wide open, which surely made a difference in our strategies for finding employment.
The Role of Dumb Luck in My Financial Success