Why do we save so little? We overestimate the happiness from spending. But with any luck, repeated disappointments will bring wisdom.
WHAT DOES a good financial life look like? Here’s a quixotic roadmap—comprised of 45 steps:
Stuff part of your babysitting or lawn mowing money in a Roth IRA. Suggest to your parents that they should encourage this sort of behavior—by subsidizing your contributions.
Get a credit card when you head off to college, charge $5 every month and always pay off the balance in full and on time. You’ll soon have an impressive credit score.
TO BORROW from the movie Casablanca, we are all “shocked, shocked” at the college admissions scandal recently uncovered by the FBI. We are seemingly united in condemning the extremes that these wealthy—and sometimes famous—parents went to, as they sought college admission for their children. We’re talking fraudulent inclusion on sports teams, submitting fake standardized test scores and outright bribery.
But the idea of parents gaming the system for their child’s benefit is nothing new to those of us in high school education.
MANY OF US have little more than a weak, reused password standing between our financial assets and a remote attacker—one armed with powerful tools and a database of passwords from security breaches. This is a losing battle. It’s the most likely way for weak computer security to put our finances at risk.
Think this can’t happen to you? I’ll bet you have at least one password taken in a big security breach. A quick way to find out is entering your email address at Troy Hunt’s HaveIBeenPwned site.
A WAR IS RAGING. On one side of this conflict is the individual and, on the other, society and culture. To the victor goes your attention and your money.
I submit you’ll win through intentionality—and you’ll lose if you let society determine what’s of greatest value to you. I was on the losing side for many years.
As an undergraduate, I thought I wanted to be a lawyer. Why? Not because I had a deep passion for the law.
EVERY YEAR, the NCAA basketball season concludes with the March Madness playoffs. Many Americans engage in bracketology—trying to figure out which teams will get knocked out in each round and which will advance. Warren Buffett even offers an annual bracket-picking challenge, where Berkshire employees can win $1 million a year for life.
This year, however, Americans with substantial retirement accounts might also want to try another form of bracketology: studying the 2017 tax law—and asking whether it offers a unique opportunity to convert hefty amounts of traditional IRA money to a Roth IRA.
AS I DRIVE around town these days, I notice a lot of cars with temporary license plates—an indication they were recently purchased. What’s the reason? When I turn on the TV, I see a commercial for a local car dealership that’s offering to accept your tax refund as the down payment on a new car. Now it starts to make sense.
The dealership knows consumers are about to receive an influx of cash. It wants to make it as painless as possible to buy a new car.
AMONG THOSE ages 23 to 38 who have had student loans, 73% have delayed one or more major financial milestones, found a Bankrate survey. This includes saving for emergencies (38%), buying a home (31%) and saving for retirement (25%).
AS I’VE BUILT out HumbleDollar.com over the past few years, I’ve come to view the site not merely as a place where folks can learn about financial issues, but as a community that thinks about money in a unique way.
This shows up repeatedly in articles from guest contributors, with their focus on topics like spending thoughtfully, helping family, behavioral finance, indexing and achieving financial freedom. It’s a community where folks are trying to be rational about money,
NO. 31: WE SHOULD plan for returns below the historical averages. Today’s rich stock valuations and modest bond yields don’t guarantee low returns—but it’s prudent to assume that’s what we’ll get.
NO. 67: MOST MUTUAL funds are sector bets. Funds often aim for style purity, sticking with just one stock- or bond-market niche. To gauge whether a fund is any good, compare it to others in the same category. But to build a diversified portfolio, buy just one or two funds from any given category—and diversify with funds from other categories.
SET UP A HOME equity line of credit. These have lost some of their allure under the 2017 tax law, because you can only deduct the interest if it’s used to buy, build or substantially improve your home. Still, a HELOC is one of the cheaper ways to borrow, and it could come in handy if you have a financial emergency or as an alternative to education and car loans.
NET WORTH. To calculate our wealth, we need to add up our assets and then subtract all debts. What counts as an asset? Include financial accounts and any homes you own. Ignore cars and household possessions, because these depreciate over time—and they typically can’t be sold, because you can’t reasonably live without them.
HumbleDollar is edited by Jonathan Clements, former personal finance columnist for The Wall Street Journal.
WHAT DOES a good financial life look like? Here’s a quixotic roadmap—comprised of 45 steps:
Stuff part of your babysitting or lawn mowing money in a Roth IRA. Suggest to your parents that they should encourage this sort of behavior—by subsidizing your contributions.
Get a credit card when you head off to college, charge $5 every month and always pay off the balance in full and on time. You’ll soon have an impressive credit score.
TO BORROW from the movie Casablanca, we are all “shocked, shocked” at the college admissions scandal recently uncovered by the FBI. We are seemingly united in condemning the extremes that these wealthy—and sometimes famous—parents went to, as they sought college admission for their children. We’re talking fraudulent inclusion on sports teams, submitting fake standardized test scores and outright bribery.
But the idea of parents gaming the system for their child’s benefit is nothing new to those of us in high school education.
MANY OF US have little more than a weak, reused password standing between our financial assets and a remote attacker—one armed with powerful tools and a database of passwords from security breaches. This is a losing battle. It’s the most likely way for weak computer security to put our finances at risk.
Think this can’t happen to you? I’ll bet you have at least one password taken in a big security breach. A quick way to find out is entering your email address at Troy Hunt’s HaveIBeenPwned site.
A WAR IS RAGING. On one side of this conflict is the individual and, on the other, society and culture. To the victor goes your attention and your money.
I submit you’ll win through intentionality—and you’ll lose if you let society determine what’s of greatest value to you. I was on the losing side for many years.
As an undergraduate, I thought I wanted to be a lawyer. Why? Not because I had a deep passion for the law.
EVERY YEAR, the NCAA basketball season concludes with the March Madness playoffs. Many Americans engage in bracketology—trying to figure out which teams will get knocked out in each round and which will advance. Warren Buffett even offers an annual bracket-picking challenge, where Berkshire employees can win $1 million a year for life.
This year, however, Americans with substantial retirement accounts might also want to try another form of bracketology: studying the 2017 tax law—and asking whether it offers a unique opportunity to convert hefty amounts of traditional IRA money to a Roth IRA.
AS I DRIVE around town these days, I notice a lot of cars with temporary license plates—an indication they were recently purchased. What’s the reason? When I turn on the TV, I see a commercial for a local car dealership that’s offering to accept your tax refund as the down payment on a new car. Now it starts to make sense.
The dealership knows consumers are about to receive an influx of cash. It wants to make it as painless as possible to buy a new car.
AMONG THOSE ages 23 to 38 who have had student loans, 73% have delayed one or more major financial milestones, found a Bankrate survey. This includes saving for emergencies (38%), buying a home (31%) and saving for retirement (25%).
NO. 31: WE SHOULD plan for returns below the historical averages. Today’s rich stock valuations and modest bond yields don’t guarantee low returns—but it’s prudent to assume that’s what we’ll get.
SET UP A HOME equity line of credit. These have lost some of their allure under the 2017 tax law, because you can only deduct the interest if it’s used to buy, build or substantially improve your home. Still, a HELOC is one of the cheaper ways to borrow, and it could come in handy if you have a financial emergency or as an alternative to education and car loans.
NO. 67: MOST MUTUAL funds are sector bets. Funds often aim for style purity, sticking with just one stock- or bond-market niche. To gauge whether a fund is any good, compare it to others in the same category. But to build a diversified portfolio, buy just one or two funds from any given category—and diversify with funds from other categories.
NET WORTH. To calculate our wealth, we need to add up our assets and then subtract all debts. What counts as an asset? Include financial accounts and any homes you own. Ignore cars and household possessions, because these depreciate over time—and they typically can’t be sold, because you can’t reasonably live without them.
AS I’VE BUILT out HumbleDollar.com over the past few years, I’ve come to view the site not merely as a place where folks can learn about financial issues, but as a community that thinks about money in a unique way.
This shows up repeatedly in articles from guest contributors, with their focus on topics like spending thoughtfully, helping family, behavioral finance, indexing and achieving financial freedom. It’s a community where folks are trying to be rational about money,
HumbleDollar is edited by Jonathan Clements, former personal finance columnist for The Wall Street Journal.