Today Show Clip: Money rules that can save your relationship

The Today Show aired a segment on “Money rules that can save your relationship”. I completely agree with ALL of these but specifically the one about declaring your own independence with money. I’ve talked about it before and we live this rule every day.

Take a look at the video clip here

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5 poor money decisions I make all the time

No one is perfect. I make spending mistakes all the time. Here are 5 poor ones I continue to make:

  1. Fast Food: I get lazy and go pick up lunch from any number of fast food restaurants. On a good day it’s Panera or Chipotle (I’m addicted). On a bad one it’s McDonald’s. I am WELL aware of the crap that is in their food but it doesn’t stop me. Also, I’m very aware that I’m wasting my money when I should eat healthier at home… but that doesn’t stop me either.
  2. Retail Therapy: If I’m feeling particularly sad or lonely, sometimes I’ll just go wander through a store and inevitably I always end up finding something I NEED. This is my trap. About 75% of the time I figure out it’s not a NEED before I check out but there’s still that 25% of the time that I end up buying it and bringing it home. A month later I realize it was a waste. Bye Bye Money!
  3. Luxury Items: I love shiny, new things. My particular weaknesses are with beauty products, handbags and shoes. Occasionally I will get obsessed with some other type of fashion item, but it is far less often. If I have a weak moment, then I might bring said item home in hopes that it will be the miracle. The one fabulous bag I will carry for the next 10 years. The lotion I will swear I can’t live without. These realities have never come to fruition but it doesn’t stop me.
  4. Buying Quantity: Costco memberships are evil. I have one. I never get out of that place for less than $100. We will never eat 64oz of RiceChips!! It doesn’t matter. I will bring one home to verify.
  5. Buying on Sale: This is probably my biggest weakness. I’m a sucker for perceived value. I love a good deal. I can’t resist it. I will buy something that I don’t necessarily even know I’ll use, but if it is a 70% off clearance item? Fuhgeddaboutit.

Like I said, no one is perfect. I am very honest with myself and the Mr. about my weaknesses. Admitting you have the problem is the first step, right? I find that our split finance arrangement helps combat this. I’m less likely to spend my own money and most of these things can’t come from the joint account because they aren’t in the budget. However, I still make these mistakes. The only thing I can say to defend myself is that I’ve progressed from making them every day to making them rarely. I keep myself in check by reviewing my personal account statement now and then. The worst feeling is adding up all the money I’ve spent on fast food each month. But, it does remind me and then I make that mistake less the following month. Another thing that helps is setting a goal. If I set a personal goal to save up and purchase something big, like the latest gadget, then I will remind myself every time I step foot into a store.

A few tips for you:

  • Be honest with yourself
  • Figure out what your weaknesses are and share them with your partner
  • Use a debit card so you can review your purchases easily each month and see exactly where your money is going
  • Set a goal for your money
  • Buy only things you have on a list
  • Plan your splurges

Allow yourself a little slack when you slip up but remember that discipline is the key to saving.

Leave a comment with mistakes you make too so I won’t feel like such a heel.

The Emergency Fund. 42% of you apparently don’t have one.

I read this in Money Magazine and was dumbfounded.

“In a recent survey for the National Endowment for Financial Education, 42% of those under 40 reported getting financial help from their parents as adults.”

I realize there are circumstances under which you would need to accept help in an emergency. However, that 42% of us have had such emergencies in our adult life means one thing.

You’re not saving enough. You’re not INDEPENDENT from your parents!

So first things first… you need to start saving up. And this is NOT for a rainy day. Rainy day funds are from the jug. This is for your emergency fund and to get you into the habit of being saver. Financial responsibility isn’t an inherent talent. You learn it. You have to study it and hone your ability to know what is a want vs a need. Now you’re thinking “I’m not interested in being a financial genius.” Believe me, neither am I. What I AM interested in is feeling the confidence that unless something cataclysmic happens, I will not need to seek financial help from my parents. You know why that is so important?? Because I feel the entire weight of responsibility to save for my future. There is no fail-safe for me. Even though our parents are well-intentioned, by rescuing you every time you need help paying your car payment, they are giving you a “parents-as-the-backup mentality”. So let’s fix that. Because mom & dad aren’t always going to be around and let’s be honest, they deserve to enjoy their savings in their own retirement.

Okay so how much to you need to save?

The rule of thumb that I like to start with is 3 months of your household expenses. If you lost your job today, it would give you 3 months to find another one. Some people say a flat amount like $10,000. If that is easier for you, then by all means do that.

Once you get your 3 months of expenses, go for 6 months or $20,000. If you have that, then go for a year or $50,000. The idea is get into the habit of saving. You can choose to put it in whatever account you like, money market, high yield savings accounts but just make sure you can get access to it within a few weeks time without penalty. (aka: Liquid)

If you already have an emergency fund then take a look at your retirement savings. According to Money Magazine, you should be saving at least 12% – 15% of your yearly income for retirement. Many companies have a 401k contribution match program. This is free money. Make sure you’re taking advantage of any opportunity to save tax free and get FREE money.

“What if I live paycheck to paycheck and NEED all my money. I can’t afford to save.”

Believe me there is always a way to pare back your expenses. If this is a problem for you then look for a future post about how to cut the fat from your monthly budget. For now start with putting $5 a day in a jar. Every day. Voila! You just saved $150 in a month. Easy peasy. The key is making it a habit and committing to it. It doesn’t matter if it takes you a few years to save up your emergency fund. Just as long as you save regularly. It’s hard at first but then it gets to be so easy.

So get started. Today.

Leave a comment if you’ve already saved your emergency fund so we can congratulate you. If you haven’t, leave a comment committing to starting today. INDEPENDENCE people. It feels great.