Got to Believe
Jonathan Clements | March 16, 2019
AS I’VE BUILT out HumbleDollar 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, but are also acutely aware of the human dimension.
That got me thinking that HumbleDollar ought to have a manifesto—key principles that should govern how we use and think about money. Last week, I added Manifesto as a regular feature on the site’s homepage. Here are a dozen initial principles—with more to be published on the homepage in the months ahead:
- Our financial life involves endless tradeoffs. We usually have a good idea of what our dollars are buying us. But to be good stewards of our wealth, we should also ponder what we’re giving up.
- It takes years to achieve full financial freedom. But we can quickly escape much financial worry—if we live beneath our means, pay off credit card debt and build a cash cushion.
- Good savings habits are the greatest of the financial virtues. If we aren’t good savers, it’s all but impossible to grow wealthy. What if we are? We’ll likely prosper, even if we’re mediocre investors.
- We should focus relentlessly on what we want from our financial life. That’ll motivate us to save, drive our investment strategy—and help ensure we pursue the goals we care about most.
- Retirement may be our final financial goal, but we should always put it first. Why? It’s easily our most expensive goal, so it takes decades of savings and investment gains to amass enough.
- We spend too much time fretting over our investments—where there’s limited room to add value—and too little on other financial issues, like taxes, insurance and estate planning.
- Paying down debt may not be our best investment, but it’s almost never a bad idea. It reduces our life’s financial risk—and earns us a rate of return equal to the debt’s interest rate.
- Very few of us need life insurance for our entire life. That’s why term insurance makes sense and cash-value policies are usually a mistake—despite what insurance agents say.
- Investing is best when it is simplest. If we own costly, complicated products, we’re filling Wall Street’s coffers—at our own expense. Don’t understand an investment? Don’t buy it.
- Our odds of beating the market averages over a lifetime of investing are so small they’re hardly worth considering. Overconfident investors insist on trying. Rational investors index.
- Our goal shouldn’t be more time to relax, but rather more time to pursue our passions. Working hard at things we care deeply about is among life’s greatest pleasures.
- Frugality isn’t just the key to financial success. It’s also no great sacrifice, because spending often brings only fleeting happiness—and sometimes even pangs of regret.
THE NEW Manifesto feature joins HumbleDollar’s increasingly busy homepage. In addition to new blog posts pretty much every day, the homepage includes a slew of regularly updated features:
- Insight. Stripped across the top of the homepage, this pithy comment endeavors to make readers think—and occasionally smile.
- Numbers offers intriguing statistics pulled from surveys, government data and elsewhere.
- Archive gives readers a second chance to read some of the site’s most popular articles from 2018 and earlier.
- Money guide. The heart of HumbleDollar is our comprehensive and continuously updated money guide. Every day, one of the guide’s sections is featured on the homepage.
- Act suggests ways to improve our money management.
- Think recaps crucial financial ideas.
- Truths details things we can say with reasonable certainty about the financial world.
- “We want the fancy car, exotic resort vacations and luxurious house—and we certainly don’t mind if others see these things and are a bit envious,” says Jim Wasserman. “But what’s the cost?”
- In the wake of the scandal involving “money guru” Jordan Goodman, here’s the lowdown on how HumbleDollar could make money—but chooses not to.
- You, too, can be a Walmart greeter: Richard Quinn offers 20 ways to ignore the experts—and wreck your chances of a financially comfortable retirement.
- Some colleges are closing, while others are suffering declining enrollment. Kristine Hayes asks: Are employers and high school students deciding a college degree isn’t necessary for the jobs on offer?
- “During poor markets, investors should expect the risky portion of their portfolios to decline by half,” writes David Hultstrom. “This is the necessary pain to achieve the higher returns expected from risky assets.”
- It was a busy February at HumbleDollar, with a new article published every day. What proved most popular? Check out last month’s top seven blog posts.
- Don’t focus on the sum you need saved by retirement, because it’s simply too daunting—and you might give up in despair. Instead, focus on how much you should save each month, advises Ross Menke.
- “Just because an investment carries the word ‘index’ in its name doesn’t make it a good investment,” writes Adam Grossman. “There are thousands of index funds—some good, some terrible—so always know exactly what you’re buying.”
- When you take on debt, you borrow not from others, but from your future self. “In effect, you’re betting that the money is worth more to you today than it is to your future self,” explains Jim Wasserman.
- Too much of a good thing? “Every friend I know who worked for a major corporation for many years has accumulated significant, if not excessive, company stock,” writes John Yeigh.
- Income tax rates are scheduled to rise in 2026, and they might be pushed even higher by budget pressures. Adam Grossman’s advice: Shovel money into Roth accounts—using four strategies.
- “Instead of spending money on a fancy restaurant, how about spending it to hire someone to handle an unpleasant chore?” suggests Dennis Friedman. “Avoiding an unpleasant experience can be just as satisfying as enjoying a pleasant one.”
- Index funds are a great investment, but that isn’t enough, says Ross Menke. “You need to put safeguards in place, so you protect yourself from yourself—from making panicky decisions.”
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