Why is “money” at the top of the stress list? The immediate response is “because we don’t have enough of it!” But in many ways, the reverse might be more accurate: We get stressed because we have to deal with so much of it, and so often. Even Americans who consider themselves less than wealthy have many decisions and transactions involving money every day, for almost everything. Because it is inextricably intertwined with almost every part of our lives, money significantly influences our sense of well-being. If we mess up with money, it messes with our contentment. And it’s not hard to mess up.
An Internet search for “personal finance software” shows there’s no shortage of technology available to help you establish financial order. Just about every program will aggregate your data, balance your checkbook, communicate with your financial institutions, and produce reports, charts, and graphs. But data is meaningless without an interpretative framework. There must be a model that gives meaning to the numbers, evaluates success or failure, and provides guidance for future decisions. Using a comprehensive balance sheet program is a “lifestyle change.” It’s not a 30-day plan to regain your financial shape that only comes into play when things have gotten out of hand. You should expect an adjustment period, but over time, this new approach should be more organized yet less time-intensive. When you are fully engaged in the process, the result is a “living” balance sheet, one that gives relevant real-time feedback, keeps you focused financially, and helps free you to enjoy the passions and pleasures in your life.
A moat and a pup tent are two things we normally don’t associate with each other. The pairing is almost an oxymoron (like “jumbo shrimp”), and the mental image brought to mind seems ridiculous, because for most of us, a moat belongs around a castle, not a pup tent. But by the time you finish this article, a moat and a pup tent may be permanently – and logically – linked in your consciousness. You’re about to experience the power of context.
For example, when the weatherman says there is a “chance of precipitation,” how high does it have to be for you to grab your umbrella? 50 percent? 70 percent? If recent information regarding retirement in the United States represents a coming trend, it may be wise to make sure some financial umbrellas are on hand. Given the possibilities/probabilities of longer lives that include retirement shocks, it should prompt both retirees and those on the cusp of retirement (and their children) to consider protective financial measures. Is your retirement protected?
One of the ongoing discussions regarding tax-favored accumulation is whether it is better for savers to incur taxes on the “seed” or the “harvest.” Some tax-favored vehicles, such as Roth IRAs, require after-tax deposits (the seed), in exchange for tax-free growth and distributions. Other qualified retirement plans (like IRAs and 401(k)s) offer pre-tax deposits but impose tax on the distribution (the harvest). Which approach is better? Understanding of the history and dynamics of the progressive income tax in the United States can be helpful in making a decision.
The research has been done. The numbers have been crunched. The conclusions are clear, and they are discouraging. Americans are in bad shape: we don’t save enough; we have too much debt; we aren’t adequately prepared for retirement. And, oh yeah…we’re fat, too. At least that’s what can be concluded from surveys about the “average” American. But what does “average” really mean? And does it apply to you?