2 Money Issues You Really Don’t Need To Worry About — & 3 You Do
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Personal finance advice can get hung up on relatively inconsequential things. Yes, small changes absolutely can improve your financial life, but there are bigger picture items that you ought to focus on before you start tinkering around with optimization. Here are two money issues that you probably don’t need to worry about—and three things you should.
Things you don’t need to worry about
1. Small pleasures
When I first started to really care about personal finances, I fell into the trap of being smug about all the little indulgences I wasn’t spending on. It wasn’t hard to when it was common in the personal finance sphere to rail against fancy coffees and eating out and other small ways of treating yourself. But quite frankly? There are far better money issues to focus on than ridding your life of the inexpensive treats that can improve your day or week or month.
By all means, take the time to regularly examine your motivations for your spending habits. Maybe you’ll find that your regular coffee run is actually your way of trying to escape a toxic job for a few minutes a day, and the problem is the job, not the coffee.
Or maybe it’s just that you really like the nearby coffee shop and have some wiggle room in your budget.
2. Budgeting every single cent
To be clear, you should be tracking where every cent goes so you don’t overspend, but it isn’t mandatory to have a specific plan for every dollar every month. There are many ways to go about budgeting, but I’ve found the one that causes me the least amount of stress is to make sure all my bills are paid and my savings goals are met—and then it doesn’t really matter where exactly the rest of it goes.
Some people thrive on the pressure of making a highly detailed budget and sticking to it; others might need to set a strict budget in order to maintain control of a limited income or to figure out why their current financial plan isn’t working for them. It’s a great tool for curbing overspending, and it can be incredibly satisfying to achieve perfection across a bunch of goals. But I find that by paying myself first, paying my fixed expenses second, and then deciding day by day where the rest goes, I can be more spontaneous while still being financially responsible. This strategy has kept me from lashing out against self-imposed austerity or setting myself up for the disappointment of missing a goal if something unexpected comes up.
Things you should probably worry about
1. Your income
Look — it’s far easier for me to be “good with money” when I’m making more than three times what I was back when I first graduated from college. That just-above-minimum wage part-time job was enough (in combination with scholarships and grants) for my student housing and other living expenses, but I couldn’t make any substantial progress on bigger financial goals until I landed a full-time job. Having more money—money in excess of what you require to survive—means that you can plan for the future, whether that’s for emergencies, adventures, housing, retirement, or something else that is financially important to you.
For some people, the path to increasing their income is starting a side hustle. Others may need to look for a new employer because their current one underpays, or they may need to start strategizing how to move up the ladder at their current job. You might need to learn a new skill or get a new certification—or you might even consider trying to break into a new industry. And no matter your income, you can advocate for a higher minimum wage, improved worker protections, and expanded social safety nets.
2. Contributing to your retirement
I graduated from college just as the Great Recession was gearing up, so my real-world introduction to 401(k)s and Roth IRAs and the stock market in general was memorable. I’d taken a family finance course in college and did a lot of research into what to do when the stock market was down, so once I had my first paycheck, I started investing. (And then I refused to look at my portfolio more than once a quarter because that would have done me no favors. I check once a month now.)
When I first started investing, I wasn’t able to put away nearly as much as I wanted—but I still contributed what I could afford. And just as importantly, I increased my contributions whenever my income increased. Right now, I’m fortunate to be in a place in my career and my life circumstances where I can save 23% of my income (that includes a company match) for retirement.
3. What you do with windfalls
If you’re lucky enough to get a windfall, whether that’s a stimulus check, a tax return, or a bonus at work, make a plan for the money as soon as you know you’re getting it. That way the moment the money hits your account, you already know what to do with it. Windfalls are great because they can be used for anything without you having to change your current financial strategy.
I’ve screwed this up in the past by letting a windfall sit in my checking account while I made up my mind, only for the money to trickle through my fingers without anything concrete to show for it. What the best use of a windfall is will differ from person to person—and yes, I include buying something that makes you happy as a best use!—but what matters is that you make a plan that makes sense for your individual situation and stick to it.
(In the spirit of full disclosure, I bought Animal Crossing: New Horizons and $50 of kitchen gadgetry with my stimulus check and then used the rest to reach my emergency fund goal. The first two make me happy in our current pandemic chaos, and the third improves my financial security.)
As with any advice, what people find helpful in their current circumstances varies. What money issues do you find yourself not worrying about, and what ones are you focusing on right now?
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