Common Sense Monday Money Management

For personal finance, and how to improve, sometimes it just comes down to plain old common sense.  Here are some tips from Jonathan Pond that I thought were worth sharing to start your week off.

Never Underestimate the Value of Common Sense

It’s easy to conclude that paying proper attention to the vast and diverse array of matters affecting your personal finances should be a full time job. But I hope you have found that personal financial planning isn’t really that complicated, despite the yeoman’s efforts among many in the financial services industry to make you believe otherwise. All it takes is some discipline and a little time. 

If successful financial planning can be boiled down to two words, they are common sense. If you think back on the less-than-stellar moves you have made with your money in the past, and no one is immune from these transgressions, you will no doubt find that your money calamities were caused by lapses of common sense on your part or on the part of someone who is advising you and who may have a different agenda than improving your financial wellbeing. 

When you were a young adult your parents probably cautioned you to think carefully before doing something risky in your life. These discussions could have covered a lot of temptations, including credit card loans – admittedly ranking way down the list of risky activities. Here’s what they were saying: A short-term money dalliance takes a heck of a lot longer to correct than it did to get into the predicament in the first place.

It’s takes a lot less time and effort to make the right moves with your money than it does to undo any wrong moves.

Don't pay for what you don't need. One of the most important money lessons to impart on youngsters is to teach them to distinguish between “needs” and “wants.” Alas, this is a lesson that many adults haven’t yet mastered. Next time you use your car, look at the cars on the road and try to estimate how many of them are paid for. (This brings to mind the Will Rogers quip: The only way to solve the traffic problems of the country is to pass a law that only paid-for cars are allowed to use the highways.) You may “want” a newer car, but do you “need” it? Cars aren’t the only bugaboo in the family budget. Day-to-day expenses can really add up, not to mention online shopping for things that may provide an ego boost, but at the expense of a money drain. As the holiday season approaches, before making any purchase ask yourself if you really need it or if something less costly will suffice. Incidentally, as to the question raised above, less than one quarter of the cars on the road are fully paid for.

Do you know what's in your safe deposit box? If not, pay it a visit and take an inventory. At the least, it will help you avoid a fruitless trip to the bank attempting to retrieve something that isn’t there. If things in the box are lost or destroyed – a rare occurrence, but it does happen, you’ll have a record of what you lost. Incidentally, the institution that rents your safe deposit box almost certainly has no insurance on any valuable contents. That’s up to the box holder. The coverage isn’t very expensive and can easily be added to your homeowner’s or renter’s insurance policy.