Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Thursday, September 01, 2016

#TBT "Saving, spending rules imperative"

This Thursday's throwback is an article Nancy wrote in her Mississippi Business Journal column in the fall of 1999--back to when we were all stockpiling for Y2K, Nancy was sharing her saving and spending guidelines.!TBT-Saving-spending-rules-imperative/b6954/57c99029c750093bcdbe5ffc

I've had death on my mind. This summer, that particular angel has not taken a vacation.

Last Saturday morning, as we began stirring in our beach rental, we turned on the television set. We were startled to hear of another Kennedy tragedy. I thought of those three people, all in their 30s, who died at the prime of their lives. I thought how death does not discriminate based on social status.

In June, we returned to Clinton from a weekend away to hear of another tragedy. A car load of teenagers was involved in a wreck. A fifteen-year-old girl was killed. She had barely begun to live. I thought of my own teenage daughter, and I thought how death does not discriminate based on age.

Arriving home this past Sunday, we received a phone call. An 88-year-old aunt who had been living in a nursing home had died. She had been living in the home ever since her stroke more than three years ago. One of her last conversations with her sister centered around her desire to die. I thought of the life she led up until her illness. I thought there are worse things than death.

In my business, I tell people to save and invest for the future. Save for that house, that college education, that worry-free retirement. Tuck away some cash for a rainy day. Be prepared for that emergency or that unexpected layoff.

Worse than death is outliving your money. The object of the game is "not to take it with you, but to make it last till you go." I've seen those people who didn't prepare for old age. It's not a pretty sight. Living in a home where you are depending on Medicaid to pay the bills is not what I want to do. I plan on having enough money to pay my own bills so that I have the choice and the kind of care that I need. So what if this sucks up my child's inheritance! I'm not working my whole life just to make things easy for her when she's an adult.

But then I thought of the Kennedys. Old age will never come to them. They didn't need that retirement nest egg. They didn't need life insurance since they had no children. And I thought of my father-in-law who dropped dead of a heart attack at age 56. I remember my mother-in-law talking about how they had pinched pennies for years to save for retirement. She wished they had spent some of that money.

It's difficult to find a middle ground when it comes to saving and spending. For the most part, we Americans err on the side of spending. In May, 1999, personal income rose 0.4% while spending jumped to 0.6%. Most of us are spending more than we make. These are the people who are counting on living hard and dying young. Heaven help them if they make it to age 90.

But there are those (and these are the minority) who are so busy preparing for old age that they can't enjoy today. My own struggle for the middle ground led me to develop a set of criteria for saving and spending.

1. Don't spend money for things that don't give you any value.

That means don't pay interest on your credit cards, if you can help it. Don't bounce checks. You can't eat check charges. Don't get speeding tickets or parking tickets. That's money down the drain. Don't gamble with hard earned money. It's not a fair game.

2. Shop around.

Shop around for cars, houses, clothing, etc. But don't forget to shop around for insurance, loans, bank services, etc. A penny saved really is the same as a penny earned.

3. Share.

Don't spend everything you earn on yourself and your family. It's not healthy. Regularly budget for charity. Every dollar you give to someone else will enhance your character tenfold (notice I said your character).

And last, but not least...

4. Save like you'll live to be 100, but live like there's no tomorrow.

--Nancy Lottridge Anderson, Mississippi Business Journal, July 26-August 1, 1999