How Much House Can I Afford?

How Much House Can I Afford?

Jason Lee  May 21, 2021 The Simple Dollar

To understand how much house you can afford, you need to take into account two important factors — what lenders will approve you for and what fits within your budget. The good news is that these budgetary guidelines typically line up. Even so, you will need to make sure you don’t take on more house than you can afford just because the lender is willing to approve a loan for that amount.

How much home can I afford?

Lenders look at a long list of criteria to determine the amount of house they’re willing to approve you for. The list includes things like your current monthly debt payments, your total debt, your income, your credit score, your current assets, how much of a down payment you can make and the current status of the economy.

1. The 5 Cs of lending

According to Wells Fargo, lender approval can be summarized as the five Cs — credit history, capacity, collateral, capital and conditions.

Credit history is your credit score and your past borrowing history can be found in your credit report. Capacity refers to what you can afford. Often, this is a look at your debt-to-income ratio — how much you are paying in debt monthly versus how much income you are bringing in.

Collateral in a home purchase will be the physical home you are buying, which becomes collateral the bank or lender can seize when you don’t repay your loan. Capital deals with what other assets you might have to help with repayment of the loan, and conditions are the purpose of the loan, the market environment and the status of the economy.

2. The rule of 20

A rule that may be somewhat antiquated — but is still widely cited as important — is the rule of 20. According to this rule, homebuyers should not purchase a home unless they are prepared to make a 20% down payment on top of the additional costs associated with purchasing the home. For example, if you are looking to buy a $300,000 home, under this rule, you should be prepared to make a down payment of $60,000.

To continue reading, please go to the original article here:

https://www.thesimpledollar.com/mortgage/how-much-house-can-i-afford/

The Official Steps to Do After You Win the Lottery

The Official Steps to Do After You Win the Lottery

Find out about all the proper steps to take if you hit a huge jackpot in this video!

166,112 views•   Mar 27, 2021

9 - The Big Decision Sometimes a little bit of self discipline can go a long long way. That’s especially true for people who win the lottery. I mean, let’s say you win a lot of money, such as 100 million dollars. That easily qualifies as a life changing event.

8 - Stay Anonymous The easiest way to save yourself from a lot of trouble after winning a giant lottery is to tell as few people as possible. If you’re able to, don’t tell anyone that you won the lottery!

7 - Resist the Urge Here’s where your self control and discipline will REALLY be tested. If you win the lottery, don’t make any major purchases that you wouldn’t normally make for a while.  You have to get used to having that money first! 

6 - Debt Free If you have any debt, the first spending you should do with the money is to start paying off all your debts. Credit card bills, student loans, and yep, even paying off your mortgage. Some people advocate not paying a mortgage off if your interest rate is low because it’s lower than the return you’d earn in another investment.

5 - The Help Biggie wasn’t lying when he said the more money you get the more problems you have.  You definitely will want to have a good team of professionals to help with all the things associated with a lottery win.

To continue reading, please go to the original article here: 

https://www.youtube.com/watch?v=1x3fNZIoKDQ

How to Help Loved Ones Financially

How to Help Loved Ones Financially

Lending a hand without breaking your bank.

Christine Benz: Hi, I'm Christine Benz for Morningstar. Many financially stable people may wish to help loved ones who are struggling financially. Joining me to discuss what can often be a sticky situation is Michelle Singletary. She's a Washington Post columnist, and she's also the author of a new book called What to Do With Your Money When Crisis Hits. Michelle, thank you so much for being here.

Michelle Singletary: Thank you so much for having me.

Benz: Let's start with something that you emphasize in the book. And you do cover this topic about how to help loved ones who are struggling financially. One thing you say is to just start with a self-assessment, if you want to help someone else, take a look at your own financial situation and make sure that you are actually equipped to do so. Can you talk about that?

Singletary: I'm a big believer in "to whom much is given, much is required." But you've got to make sure that your financial house is stable. And the more you have, you might sort of feel like, "Well, of course, I have this extra money, I've got this retirement account..." But you really need to look at what your needs are first.

Make sure that you're secure before you give out of your extra. And so it means that you got to know your numbers, you have to understand, for example, if you're older, how much you have allocated for healthcare, long-term care.

If you don't have long-term-care insurance, you got to make sure that pot of money is there. And then when you do that, when you've assessed it, and say, "Yeah, I've got some extra," then you start to think about: How can I help my adult children, my grandchildren, extended relatives, siblings?

I know for myself and my family, I've got the good job. And so there is a lot of demand on my salaries and savings from family members. And my husband and I have set up a system by which we help folks. And it is very, I have to say, it's pretty intense. And for a reason. There is a practical reason behind that.

Because once your relatives and friends and adult children know that you've got a system in place, they're not going to just come to you with willy-nilly stuff, right? They're going to come with when they really need the money. And that's what you want to hope for.

Benz: Let's talk about this system. You wrote in the book that it is important to have a conversation about the person you want to help's financial situation. So you need to get, as you call it, a little bit in their business. Let's talk about that. Because you want to be sure that, actually, you can help and that you're not just putting a band-aid on what is an ER-type situation. Let's talk about how you go through that assessment.

To continue reading, please go to the original article here:

https://www.morningstar.com/articles/1032992/how-to-help-loved-ones-financially 

45 of the Top Finance Quotes to Boost Your Money Mindset

45 of the Top Finance Quotes to Boost Your Money Mindset

Todd Kunsman  Invested Wallet  in Financial Independence

Looking for finance quotes and quotes about money that can inspire you to take charge of your financial life?

Top Finance Quotes

Even if you aren’t in search currently, these quotes will keep you motivated and make you think differently about finances and money.  For me, besides these personal finance books, reading these particular quotes about money helped me get in the right financial mindset.  I’d recommend even keeping some of these financial quotes at your desk as a healthy reminder or for motivation.

45 Top Finance Quotes

While there are thousands of finance, money, and investing quotes out there, I only chose a small portion of them to keep this simple, yet informative.  These are the quotes that I really like, resonated with me a lot during my financial journey, or made me laugh a bit.  Step your money game up with these interesting, inspiring, humorous and wise quotes.

1. “Rich people have small TVs and big libraries, and poor people have small libraries and big TVs.” – Zig Ziglar

2. “Too many people spend money they earned..to buy things they don’t want..to impress people that they don’t like.” – Will Rogers

3. “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki

4. “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson

5. “An investment in knowledge pays the best interest.” – Benjamin Franklin

6. “Time is more value than money. You can get more money, but you cannot get more time.” – Jim Rohn

7. “I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.” – Warren Buffett

8. “Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.”- Benjamin Franklin

9. “Friendship is like money, easier made than kept.” – Samuel Butler

To continue reading, please go to the original article here:

https://investedwallet.com/top-finance-quotes/ 

Why Money Is Important and The Role It Plays in Our Lives

Why Money Is Important and The Role It Plays in Our Lives

By Todd Kunsman Invested Wallet

At some point, you may wonder why money is important and start to analyze the role it plays in your own life.  And our society has plenty of different viewpoints when it comes to money and happiness, how much money is truly enough, and how to better with money.  I’m sure you have heard many of the different sayings about money too, whether funny or to hit a particular point to make you think.

You know the ones, like:

“Money doesn’t buy happiness.” – Proverb

“Money is the root of all evil.” – 1 Timothy 6:10

“Having money isn’t everything, not having it is.”  – Kanye West

But you’ve probably heard many proverbs, famous quotes, or other sayings from people around you. And while there may be some truth to not let money dictate your entire life and choices, money IS important.

Why Is Money So Important?

The reason money is so important is that it provides options for you to live a better life that you choose and puts you in control. Having money and being comfortable with finances also gives you freedom and options to decide how you want to live and support the things you care most about in your life.

And yes, it’s true that money cannot necessarily buy you complete happiness forever and greed can make people do terrible things. Look what the hunger for more wealth and money did to Bernie Madoff and how he ruined the many families who invested with him.

But while there is truth to some of the negative connotations to money, ultimately you have the strength to dictate how you use money and if you let it control you.

Money is not everything in this world, but it can be powerful in helping you achieve your goals and let you make the best of the short life we all have.

The Real Benefits of Money

While your whole life does not need to focus on money and accumulating wealth, it is still important to dedicate your time to understanding it and building a strategy. 

Look, we all know that more money means you can generally afford a fancier lifestyle, bigger homes, better vacations, and flashier cars. But those material items are not the real benefits of having money and the temporary excitement from those items quickly wanes.  So why is money important?

To continue reading, please go to the original article here:

https://investedwallet.com/money-is-important/

How To Deal With Sudden Wealth Syndrome and Manage Newfound Riches

From Recaps Archives

How to Deal With Sudden Wealth Syndrome and Manage Newfound Riches

By Amy Livingston

A lot of people have fantasized about suddenly striking it rich. They imagine that a financial windfall – inheriting a fortune from a distant relative, collecting royalties for a best-selling novel, or even winning the lottery – would make all their dreams come true. They picture themselves traveling the world, lounging on beaches, sipping champagne under blue skies while palm trees wave in the breeze.

But when this dream of sudden wealth actually comes true, it often turns into a nightmare. Instead of feeling happy and carefree, people who get rich quickly tend to become stressed and anxious. Their relationships often suffer too, as the money creates distance between them and the people they were once close to.

Sometimes, the newly wealthy try to comfort themselves by going on a wild spending spree. Unfortunately, this often makes matters worse. If the money isn’t as limitless as they thought, their newfound wealth quickly disappears, leading to even more stress.

These problems are so common that psychologists have given them a name: “sudden wealth syndrome.”

Now, maybe you think that if you came into a fortune, you’d be able to avoid these problems – or at least that you’d love the chance to try. But sudden wealth syndrome can happen to anyone, and it’s important to be aware of the problem. That way, if you ever find yourself with a windfall, you’ll know what symptoms to watch out for and how to head them off.

What Sudden Wealth Syndrome Means

Sudden wealth syndrome can damage your life in several different ways. It can lure you into reckless investments or overspending, which can leave you worse off financially than you were before the windfall. It can also cause mental and emotional stress as you struggle to adjust to your new lifestyle. And finally, it can put a strain on your relationships with others – both old and new. 

Effects on Finances

Ironically, gaining too much wealth too quickly can hurt your finances in the long run. People who acquire large sums of money all at once, rather than building it up over time, often lack the skills needed to manage it wisely. They don’t have a good sense of what things really cost or how much they should expect to pay in taxes. They simply assume they can spend as much as they want – and by the time they realize they’re wrong, they’ve often run through most or even all of their new fortune.

This problem shows up with all different kinds of financial windfalls, including:

Lottery Winnings. A famous 2010 study in the Review of Economics and Statistics looked at nearly 35,000 people who won between $50,000 and $150,000 in the Florida lottery. It found that within five years after their wins, more than 1,900 had filed for bankruptcy. This made the bankruptcy rate for lottery winners in Florida nearly twice as high as regular Florida residents.

Inherited Wealth. A 2012 study in the Journal of Family and Economic Issues found that people who inherit large sums in their twenties, thirties, and forties only save about half the money. They either spend the rest or lose it through poor investments.

Short-Term Income. Even people who earn their riches don’t always know how to put them to good use. A 2015 paper in the American Economic Review looked at NFL players drafted in the late 1990s and early 2000s, who earned more in a six-year career than most people do in a lifetime. It found that 15% of them had filed for bankruptcy within 12 years after retirement. Depending on how you measure, that rate is either close to or much higher than the typical bankruptcy rate for men their age – most of whom earn much less.
 
Effects on Emotions

Even when people know how to handle a windfall financially, they can’t always handle it emotionally. Sudden wealth often brings with it a range of new and unpleasant feelings, such as:

Shock. The newly rich have trouble believing the money is really theirs. Sometimes, they’re afraid to tell anyone about their good fortune because they don’t quite believe it.

Guilt. They feel like they don’t truly deserve the money. Often, they notice that others envy their good fortune, and this makes them feel upset and lonely.

Uncertainty. Instead of feeling empowered by their new wealth, they feel paralyzed. They have trouble making even the smallest decisions about what to do with the money.

Anxiety. They fear their newfound wealth will somehow vanish just as suddenly as it appeared. They often develop what therapist Stephen Goldbart calls “ticker shock” – watching the stock market obsessively to make sure their new fortune isn’t losing value.

Goldbart, who often works with the wealthy, says in an interview with WebMD that the newly rich often face an “identity crisis” – especially if they’re still fairly young. Because they no longer need to work for a living, they feel cut off from their peers in the workforce. They aren’t sure how to see themselves as “retired” when their working lives have hardly begun. By contrast, people who strike it rich in their fifties and sixties often handle it better, partly because it’s seen as normal for people to accumulate wealth as they age.

Effects on Relationships

Just as the newly wealthy begin to feel uncertain about themselves, others in their lives often act differently towards them. Close friends and family members often resent their good fortune and treat them with rudeness or disdain, and the newly wealthy feel lonely and isolated as their old friends pull away.

Meanwhile, other people in their lives start acting more friendly and affectionate than before. Instead of easing the loneliness, this show of affection often makes it worse, because they suspect these people are interested in the money and not in them.

They imagine these people are hoping their newly wealthy friend will choose to lend money to family and friends, handing it out to anyone who asks. The newly wealthy tend to pull away from these “friends” as well and feel even more isolated as a result.

In many cases, their own behavior is part of the problem, as well. Their new wealth gives them the freedom to enjoy travel and other luxuries that some friends can’t. If they decide to take off for a week in the Bahamas, most people they know won’t be able to drop everything and tag along – even if their wealthy friend is picking up the tab.

Sometimes, the newly rich try to fill the hole in their lives by forming new friendships with people who share their lifestyle. But even with other wealthy people, it can be difficult to tell if these friendships are genuine or opportunistic.

How to Deal With Sudden Wealth

The above makes it sound like striking it rich could be the worst thing to happen to someone, rather than the best. But it doesn’t have to be. When you are aware of the signs and symptoms of sudden wealth syndrome, you can take steps to protect yourself. You can also learn how to handle your new wealth so it adds to your life, rather than detracts from it.

Protect Your Wealth

The first thing you need to know when you come into a large sum of money is how to protect that money so you don’t lose it all. Here’s what experts recommend:

Keep It Quiet. Financial planner Robert Pagliarini, writing for Forbes, says that when it comes to sudden wealth, “the fewer people who know the better.” By keeping your good fortune a secret, you can avoid the pressure from swarms of people – friends, businesses, and charities – seeking a piece of it. You can also avoid being bombarded with financial advice, which, even if it’s well-intentioned, isn’t necessarily welcome.

Avoid Hasty Decisions. Don’t rush into any decisions about how you’ll spend or invest your new wealth. Avoid making any promises – financial or otherwise – until you know exactly how much you have and how much you can afford to spend.

Financial expert Susan Bradley, author of “Sudden Money: Managing a Financial Windfall,” recommends spending your first few weeks, or even months, as a wealthy person in a “decision-free zone.” This gives you time to process your feelings about your situation before you to decide to act.

Figure Out What You Have. Before you can start putting your money to use, you need to work out how much you really have. This isn’t always obvious at the outset. For instance, as this CNN article explains, a New York City resident who wins a $1.5 billion lottery jackpot and chooses to take the money as a lump sum will actually end up with only $577 million after taxes.

Similarly, if you’ve inherited money, you’ll need to read the exact terms of the will and find out what form the money comes in and what limits there are on how you can use it. So, before you spend a dime, go through all the legal papers tied to your cash windfall, fine print and all. Highlight any terms you don’t understand and look them up, taking care to use only reliable sources.

Set Goals. Once you know how much money you have, start figuring out what you want to do with it. Think about both short-term and long-term goals. You can break these down into four areas: lifestyle, family, future, and charitable donations. This exercise will help you figure out how to spend your windfall wisely.

Hire an Advisor. Once you know what your specific goals are, you can work out how much money you need to put towards each one. This is where a professional advisor can be a big help. A qualified financial advisor can help you figure out how much you can afford to spend each year so your money will last.

They can also steer you towards sensible investments to make the most of your money. To find a financial advisor, start by asking for referrals from friends, family, and professionals you trust, such as a family accountant. Then take the time to vet all the candidates, looking into their background, philosophy, references, and fees. Don’t rush this step; having a financial advisor you can trust is well worth the wait.

Keep Your Guard Up. A financial advisor can also help you in another way: by protecting you from requests for handouts. Refusing to lend money to friends and family can be awkward, but it’s easier when you can say, “I can’t make any loans without checking with my advisor.”

Your advisor can also handle other types of money-seekers, from charities looking for aid to people trying to squeeze money out of you via threats or frivolous lawsuits. You can tell all these people to send their requests to your advisor, which will help shield you from constant pressure.

Control Your Access to the Cash. There’s one more person you need to protect your wealth from: yourself. If you know you won’t be able to resist blowing through your money, then it’s best to stash it away where you can’t get at it easily. For instance, you could use some of the money to buy a house with cash, put some into college savings funds for your kids, and sequester some in retirement funds.

Get Used to Your New Wealth. Finally, take some time to adjust to your new position. Don’t start thinking of yourself as a rich person and spending willy-nilly, or you probably won’t stay rich for long.

Instead, get used to the new income level you’ve worked out with your financial advisor and do some experimenting to see how much it can buy. If you’re really itching to spend some of the money, experts suggest allowing yourself one clearly defined splurge, such as a vacation or a new car.

Enjoy that one luxury and get it out of your system, then settle down and live sensibly on your new income.

Protect Yourself Emotionally

Taking it slow with your newfound wealth can help you financially, as well as emotionally. It lets you process your feelings about your new situation, instead of trying to adjust to a new identity overnight.

The time you spend in the “decision-free zone” will ease you through the shock of suddenly being wealthy. It will allow you to get over your uncertainty and figure out how to invest your money in ways that fit in with your goals and values. This, in turn, will help relieve you of the anxiety about possibly losing your wealth and convince you that you really do deserve to have it.

However, many people need a little more help getting over the emotional stress of going from rags to riches overnight. Bradley says most people dealing with sudden wealth syndrome should consult a therapist. It’s much easier to get through this transition with the help of a professional than to do it all on your own. After all, you can certainly afford it.

Protect Your Relationships

Protecting your new wealth is paramount, but protecting your relationships with others is important too. Experts say one of the biggest mistakes newly wealthy people make is to retreat from the people who were once close to them. Often, they do this because they’ve become insecure and suspicious, fearing that everyone around them is only after their money. Whatever the reason, this behavior only leads to loneliness.

To avoid this problem, experts advise that you make the effort to stay close with your friends. Continue to take part in the same activities you’ve always enjoyed with them, whether that’s a weekly yoga class or a poker night. Holding on to established friendships will help you stay grounded, and having an active social life will cut down on your stress level.

It’s also important to avoid pushing friends away by accident. When you’re suddenly wealthy, it’s easy to get carried away with spending behaviors that your friends can’t easily keep up with. If you suggest replacing that casual poker game with a trip to Monte Carlo, you’ll probably end up leaving your friends behind. So, make a point of remembering their financial limits when you get together.

Finally, remember that while you don’t have to give money to everyone who asks for it, it’s a nice gesture to share the wealth in ways of your choosing.

For instance, flight-attendant-turned-entrepreneur Sandy Stein shares in a BBC interview about how she took one of her best friends from her airline days on a polar bear expedition. Gestures like this – treating your friends to a trip or a social outing – are a way to show your true friends that you still care about them.
 
Final Word

One of the biggest problems for people with sudden wealth syndrome is that they don’t get much sympathy from others. To a person who’s still struggling along on minimum wage, it’s hard to imagine that a neighbor who just won the lottery could actually be having a difficult time dealing with the change. Many newly rich people don’t dare talk to their friends and family about the problem, because they think it makes them seem obnoxious.

If you’ve just come into money, one of the most important things you can do for yourself is to acknowledge that it is stressful, and it’s okay to need help to process it. When you understand that gaining money is a real source of financial stress, it becomes easier to deal with it like you would any other kind of stress.

Talk with friends, get some exercise, and, if necessary, see a therapist – and don’t feel embarrassed about doing so. Being stressed out about a financial gain is no more shameful than being stressed out about a financial hardship.

Do you know anyone who’s suffered from stress due to sudden wealth?

https://www.moneycrashers.com/deal-manage-sudden-wealth-syndrome/

Is $10,000 A Lot of Money? What You Need To Know

Is $10,000 A Lot of Money? What You Need To Know

As you begin building your net worth and reaching new financial goals, you may set your eyes on reaching $10,000.

Is $10,000 A Lot of Money? It’s a pretty big milestone to hit, especially if you are starting fresh in your financial journey.

The first time I had $10k saved, I had to refresh my bank screen a few times because it didn’t seem real. After all, prior to that goal I typically never had more than $1,000 saved at a time!

And although this is a nice sum of money after you reach this milestone and the excitement wears off a bit, you may stop to wonder a few questions:

Is $10,000 a lot of money? How far will this amount take me? What should I do with this amount of cash?

Is $10,000 A Lot of Money?

Having $10k saved is a commendable milestone but overall it is not typically considered to be a lot of money. For a majority of Americans today, this amount may only cover 3-6 months of living expenses pending their lifestyle and where they live. It seems to fall into the category of “having a lot of money” that you’ll want to have $100k+.

Overall, it’s hard to say an exact number of what constitutes a lot of money as everyone has different personal money mindsets, living expenses, and how you budget your income.

Is $10,000 in Savings Good?

Now don’t get discouraged by the previous section where we’ve basically established that $10,000 is not exactly a lot of money. It’s certainly an awesome achievement, especially when you consider that the Federal Reserve reported that 39% of Americans don’t have enough money on hand to cover a $400 emergency.

So remember, when you hit this $10k savings goal take the time to celebrate and feel good about your efforts. It can be a long journey of work on your personal finances!

So, is $10,000 in Savings Good?

To continue reading, please go to the original article here:

https://investedwallet.com/is-10000-a-lot-of-money/

There Are 7 Money Personality Types

There Are 7 Money Personality Types, says psychology expert—how to tell which one you are (and the pitfalls of each)

Published Wed, Apr 28 2021 Ken Honda, Contributor

We often stress about the importance of financial literacy, such as gaining a strong understanding of how money works and having the resources to make informed decisions.

But when it comes to establishing financial health, one thing most people fail to consider is their money personality type — or their approach and emotional responses to money.

We each have our own beliefs and emotions about money, and they are mostly shaped by our individual life experiences (e.g., passed down from our parents or influenced by our current situations).

In my 10-plus years of researching the psychology of money and happiness, I’ve found that there are seven distinct money personality types. Typically, we fall into a combination of many types, and not just one

Identifying which types you fall under, and understanding the pitfalls of each, can significantly improve your relationship with money. It can help you do things like spend less on impulse purchases, be better about budgeting, invest wisely and ensure a nice nest egg for retirement.

1. The Compulsive Saver

Signs you might be a Compulsive Saver:

You put away money endlessly, sometimes with no actual end goal in mind.

You believe saving money is the only way to feel more secure in life.

You’re very frugal. (Friends will often come to you for advice on which phone company is the cheapest, which point cards are worth it, or when to buy plane tickets at the lowest price.)

Pitfalls: Some Compulsive Savers are so afraid of losing money that they go their entire lives without spending any of what they worked so hard to save. For example, they might choose to skip out on hobbies or activities that could bring them happiness and purpose.

Money advice: It’s all about moderation; learn to find a balance between saving money and enjoying life. Think about where you see yourself in the future and how you can use your savings to get there.

To continue reading, please go to the original article here:

https://www.cnbc.com/2021/04/28/7-money-personality-types-and-the-pitfalls-of-each.html

The Power of Financial Habits

The Power of Financial Habits

Samantha Lamas   Feb 10, 2021

Adopting mental shortcuts can help you stick to a budget.

Many financial decisions force us to balance what we want now against what’s better for us in the long term. In this classic want/should conflict, a “want” is something that grants immediate pleasure, while a “should” is something that offers benefits much later--such as healthy retirement savings.

We all know we should be doing things like saving for retirement, paying off our debt, or monitoring our spending, but these "shoulds" are hard to put into practice. Why? Because we are human. We aren’t made to think 30 years from now, even though we should be doing so.   With that in mind, how can we get ourselves to accomplish our "shoulds"? One way is to develop healthy financial habits.

Don’t Underestimate the Power of a Good Financial Habit

Our mind is constantly using mental shortcuts to make decisions, some of which come from our habits. Many of us don’t even notice our own habits because they’ve become something we do automatically. These simple habits make our lives easier by helping us combat the multitude of decisions we make daily. For example, most of us brush our teeth every morning. Instead of waking up each morning and pondering whether to brush our teeth, our habit makes the decision for us. Not only is this one fewer decision we must make, but it also may lead to better dental hygiene.

Similarly, developing the right financial habits may help make decisions easier and improve our overall financial well-being. Many people think that building a habit is all about repetition, but a few other factors must be considered:

1) The difficulty of the behavior

2) The context of the decision

3) The immediate reward associated with the behavior

Keep Your Financial Habits Simple

When it comes to building a habit, the more complex the desired behavior is, the harder it can be. For our finances, using a simple but effective rule of thumb can be a solution.

In our recent research, we began sifting through the many rules of thumb in the media to identify the rules that financially well-off people tend to use. Rules like "Always pay debt in full when possible," "Save up for big purchases," and "Have an emergency fund (to cover three to six months of expenses)" seemed to float to the top. That said, choosing a rule of thumb to follow must be a personalized decision. Try choosing a rule that fits into your lifestyle and can help you reach your financial goals.

To continue reading, please go to the original article here:

https://www.morningstar.com/articles/1022305/the-power-of-financial-habits

How to Apologize: The 6 Elements of a Good Apology

How to Apologize: The 6 Steps of the Perfect Apology

By Matt Berical

The perfect apology consists of six distinct components. Master them and learn how to repair mistakes before they turn into conflicts.

 “Love means never having to say you’re sorry.” Is there any more worthless a platitude? When you’re in a relationship, especially for any significant period of time, you are going to have to say sorry for something. But do you know how to apologize effectively? There are different grades of apology: There’s the “Oh, sorry,” apology you cast off when you just want someone off your back. There’s the blunt “I’m sorry, okay?” when you sort of mean it (but not really).

We all do those — and there’s a time and place for it — but being on a receiving end of a non-apology apology sucks. When you really, truly need to apologize for something you’ve done, something that has wronged or insulted or hurt your partner, you need to understand the components of a true apology.

So what makes for a good apology?

You have to mean it, sure. But, per Roy Lewicki, professor emeritus of management and human resources at Ohio State University’s Fisher College of Business, there’s a narrative structure that every good apology should follow. An expert on negotiation, Lewicki spent years researching what makes an apology. Like any narrative, he realized, it must stick to a certain structure. As such, he’s broken it down the perfect apology into six components.

Understanding these six steps will allow you craft an apology that really, truly means something. It sounds a little complex, but Lewicki explains that, when followed properly, these six steps are not only very simple, but also quite effective. We asked Lewicki to break down each one and explain how and why they work so well.

How to Apologize: The 6 Elements of a Good Apology

1. Expression of Regret

To start, you simply must tell the other person that you’re sorry for what you did. It’s important that you get this part right, because it will set the tone for everything that follows. Tone is crucial. If you sound insincere, sarcastic, or at all annoyed, then whatever else you have to say will ring hollow.

“What this does from the speaker’s point of view is try to express how sorry they are for the offense,” Lewicki explains. “This is where tone can make a difference. You can say, ‘I’m really genuinely sorry,’ and communicate some emotionality in that. Or you can be sarcastic and say, ‘I’m sorry, did I offend you?’ and totally diminish the content of your apology.”

2. Explanation of What Went Wrong

To continue reading, please go to the original article here:

https://www.fatherly.com/love-money/how-to-apologize-the-6-steps-of-the-perfect-apology/

Does F.I.R.E. Prevent Divorces?

Does F.I.R.E. Prevent Divorces?

By FIRECracker  April 26, 2021

The F.I.R.E. movement, which stands for Financial Independence, Retire Early.

In my last post about not losing yourself in retirement, reader Steve posted an interesting question in the comments:

“Any thoughts on the FIRE couples that get divorced? One would think that not having money issues (the #1 stressor for married people) and achieving a monumental goal together would strengthen that bond, but apparently there is more to it.”   –Steve

This got me thinking. If money, which is the #1 reason why couples break up, is no longer an issue, why are FIRE couples still getting divorced?

Now, I’m no relationship expert and this is me taking a wild stab at it, so feel free to take it with a grain of salt. Having seen some friends and family get divorced for reasons other than money, I’ve noticed that marital problems don’t just drop on a couple by surprise and then explode their marriage like a grenade. Instead, they pile on gradually like a gentle snowfall. And because it sneaks up on you, you don’t realize until it’s too late that you’re trapped in a blizzard, praying you won’t die a horrible frostbitten death.

I’m not sure how I stumbled on this, but marriage counsellors recognize something called the “Four horsemen of the marriage apocalypse.” These are patterns they see over and over again in seemingly predict marriages that are destined to fail. Intrigued, I started reading up on them and realized, yup, in pretty much every divorce I’ve witnessed, the patterns they describe are eerily familiar.

Curious? Well, here they are…

HORSEMAN #1: CRITICISM

No relationship is perfect, and we’ve all playfully criticized our spouses from time to time. In fact, “taking the piss” and mocking your spouse just shows how much you love them. For example, Wanderer loves it when I make fun of his weak, little girl arms (Wanderer is glaring at me for some reason as I write this). And I love it when he laughs at me for not being able to figure out how to unlock a door.

But when that criticism happens on a daily basis with the intention to hurt the other person, it’s a sign that a relationship could bite it. And when I say criticism, I don’t mean complaints, which are related to actions, like “you didn’t do the dishes!” or “you forgot to take out the trash again!” I mean, nasty, soul-destroying insults that stab you like a steak knife straight through the heart.

Eg. “You’re so lazy! All your friends are more successful than you and all you do is bum around the house.”

Eg. “You’re so selfish! You never think about anyone else but you!”

If your spouse is bombarding you with more criticism than an overbearing tiger mother, this is one of the first signs that your marriage is in trouble.

HORSEMAN #2: CONTEMPT

To continue reading, please go to the original article here:

https://www.millennial-revolution.com/freedom/does-fire-prevent-divorces/