This Week in Your Wallet: Don’t Travoltify Your Savings — Or Your Retirement
Sometimes, ahemm, John Travolta, we all make mistakes. His mispronunciation of Idina Menzel as something like Adele Dazeem (and I’m not even sure I got that right) on the Oscar stage Sunday night has already spawned multiple Twitter accounts and, thanks to the folks at Slate, a verb — Travoltify. (Find out your Travoltified name here; mine is Jan Crarter.)
One thing you don’t want to Travoltify is your savings. Unfortunately, many people do – they start too late, don’t put away enough, raid the kitty for purchases that later seem unimportant. So last week, to get at the heart of savings success, we asked you: At those times in your life when you’ve saved well, what has given you the oomph to do it?
Automating yourself to success topped the list. A life event (birth, marriage, divorce) also weighed high. I had suspected hitting a milestone birthday might have nudged people into action, but with a couple of exceptions it didn’t. I particularly enjoyed the pearls from:
Jennifer: “For me the secret sauce was creating visual representations of my savings, debt, and spending. I have charts in excel that show each month on a graph and the visual of those little lines and/or bars moving in the right direction motivates me.”
And Mark: “As a psychologist, I know that most people are too now-focused to be able to ACTIVELY set aside money for tomorrow, much less years down the road. When savings are deducted automatically from a paycheck, we get used to the disposable income that’s left, and hardly notice (stuck in with all the other deductions) that we’ve put money in the bank for the future.”
Both of you have won a free Money School class (if you don’t want to attend, you can give it to a friend). And I’m wondering…what’s the biggest financial mistake you’ve ever made and how would you prevent others from doing the same thing? Email me your responses at jean@jeanchatzky.com.
Don’t botch your retirement planning
A heads up about the new mobile app Merrill Edge’s Face Retirement. Here’s how it works: You take a picture of yourself and the app ages your face to see if you’ll look like your parents or grandparents down the road. Why would people subject themselves to this? Because research from Stanford University has shown being able to see yourself older actually incents you to focus on your retirement planning and save more. While wrinkles aren’t something to look forward to, neither is the increased cost of living at retirement age — especially if you’re unprepared. Check out my aged picture here. I can’t say it made me want to save more, but it did make me want to buy some anti-aging cream.
On the blog
Recently on the blog we welcomed Sophia Bera, a certified financial planner with a knack for millennials, although her advice on maximizing company benefits can cross all generational lines. Considering your salary is the big ticket item when signing up for a job, it makes sense that we sometimes overlook the other perks that come with it. Retirement accounts, insurances and paid vacation days all come to mind. Also, some company benefits include stock options via an employee stock purchase plan (ESPP). Think of it, Bera says, as company stock on sale.
And while we’re talking stocks…
If Buffet says so…
If you’ve been focused on picking winning stocks, Warren Buffet says you’re going about it all wrong. As USA TODAY reports, Buffet’s no nonsense, and straightforward tactic is: Don’t try to pick winners. Each year Buffet writes a letter to Berkshire shareholders giving them advice. Media outlets received an excerpt early this year in which he says: “The goal of the nonprofessional should not be to pick winners — neither he nor his ‘helpers’ can do that — but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.” For more, read the full article.
Have a great week,
Jean
