Seven financial planning diseases

< Prev | 1 | 2

4. Disease: Extreme Save-ism -- Thrift is a virtue, but some see saving as an end in itself and forget how to use money wisely. It's nice to leave something to your children, but it makes no sense to build a nest egg if you don't enjoy spending a reasonable amount on travel, living where you want to be or following your passion--even if your violin lessons scare the cat.

Cure: Tyson urges savers to ask a basic question: To what end are you squirreling money away? If you don't have an answer, your desire to save may be limiting other aspects of your life. Don't let the desire to be thrifty impoverish your life. (See: "The Seven Deadly Excuses Hurting Your Finances.")

5. Disease: Procrastination -- If you were traumatized by a decimal point in your youth and now let bank and mutual fund statements or bills pile up on your desk unopened, you probably have negative associations with money and deal with bad memories simply by avoiding the subject. Perhaps your parents squabbled about money when you were a kid, or maybe you just don't like to keep track of financial matters because it brings back bad memories of your high school math teacher.

Story continues below ↓

advertisement | your ad here

Cure: Tyson says getting organized can boost your returns and save you late fees on payments and penalties on filing your taxes. Remember that avoiders span the income brackets. The difference is that the wealthy can hire managers and advisers to handle the basics. The rest of us have to do the work ourselves. Some people have large sums of money kicking around in a checking or low-interest savings account. Take a look and sort things out. You work hard for your money and your money should work for you. (See: "Family Financial Planning.")

6. Disease: Mismatched Style -- Opposites attract when you're in the golly-gee-wow, getting-to-know-you phase of a relationship, but can lead to endless strife if one spouse is a saver and the other is a spender, or if one favors a buccaneering style of investing while the other is a buttoned down conservative with money.

Cure: Tyson says it's important for couples to talk about their differences in financial planning, dreams and aspirations. Compromise is the key to success: Without it, one partner won't get anything and the problem will fester. (See: "Family Financial Planning" and "First Comes Love, Then Financial Planning" and "Living Well In Retirement.")

7. Disease: Adolescent-Onset Budgeting Woes -- Some kids believe their self-worth is defined by the brand of sneakers they wear. (It's called advertising, kid.) Others know the cost of the latest electronic gizmo, but don't know the value of a buck. Parents want the best for their kids, but some throw money at them because they feel guilty about spending long hours at the office.

Cure: Tyson says it's a good idea to give your kids a financial stake in their current passion--Nike running shoes, an Apple iPod or a laptop from Dell Computer. Rather than flashing the credit card, have the kid work, scrimp and save to learn the value of money and the cost of the item. Part-time jobs after school teach discipline, and the paycheck will create a sense of independence. The smart parent requires the child to save a portion of each paycheck for school. (See: "Better Budgeting For College Students" and "Teaching Kids About Money" and "Back To School Finances 101.")

There are many financial Web sites that provide a good starting point to learn the basics of personal finance, including Capital One Financial, Lending Tree, a division of IAC Interactive and major banks such as JPMorgan Chase, Bank of America and Wells Fargo.

It's important for parents to set a good example for their children.

"Your behavior shows kids what you think is important in handling money," Tyson says.

< Prev | 1 | 2

Discuss Story On Newsvine
Rate Story:
View popularLowHigh
Email
Instant Message
Print