Everyone knows the key to building wealth is through saving and investing. Yet last year, the U.S. Commerce Department’s Bureau of Economic Analysis revealed that Americans had a negative savings rate for the first time since the Great Depression.
Before you can stop making excuses, you’ve got to understand just why your argument is not valid.
So why aren’t people saving for their futures and what excuses are there?
1. I don’t make enough money. What’s the first thing you pay when you get your paycheck? If the answer is your mortgage, your car note or your credit card bills, you’re probably buying into this excuse. The first check you write every month should be to you. That should go to your savings. Start with 5%; hopefully you can get to 10%. When you get a raise, put half of your raise in savings probably buying into this excuse.
2. I’ll get around to it later. The answer to that excuse is: Someday never comes. You get older and the more bad habits you have, the harder it is to break them.
3. I deserve a little luxury in my life. The purpose of having a healthy savings plan is not to deny yourself the pleasure of buying things you like today.
4. Someone else will take care of it. While this is more likely to be the excuse of a spouse waiting for the other to bring home the bacon, anyone can fall into the trap of putting the savings responsibility onto someone else. Ultimately, you are responsible for your own financial future.
5. I’m saving through my 401(k). The reason people get themselves in trouble financially is because they don’t have anything in savings. They think that because they own a home and they’re building equity or they have money in their 401(k) that’s enough. If there’s an emergency or the car breaks down, then they start borrowing money. A savings plan should have a multilayered approach: Savings should be allotted for retirement, emergencies and the evolving needs of life.
6. This item or service will pay for itself. One of the main reasons people give for blowing their savings is because they’re buying intangibles that are worth more than money over time. While there are some items that fall into this category such as an education, it’s easy to rationalize that something is worth more than it is. People say ‘I should buy a vacation because I will learn about the world. That may be true, but “you have to compare financial freedom to the benefit of the trip around the world.”
When Family Teams Up For Business
The standard issues facing any start-up family business include choosing and establishing the operation’s legal structure, writing a business plan, selecting a location and securing funding. “Salaries and bonuses should be agreed upon upfront,” said John Barsella of the
Know how you will make decisions: Does a simple voting majority prevail, or do you need unanimous approval? Agree from the start that honesty and openness will trump any reticence about offending a relative’s sensibilities. You’re not just family members now, you’re also business partners.
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(source: SmallCapMarketWatch.com)
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