The Top 10 Places Your Next Dollar Should Go

The Top 10 Places Your Next Dollar Should Go

By Tim Maurer There is no shortage of receptacles clamoring for your money each day. No matter how much money you have or make, it could never keep up with all the seemingly urgent invitations to part with it. Separating true financial priorities from flash impulses is an increasing challenge, even when you’re trying to do the right thing with your moola — like saving for the future, insuring against catastrophic risks and otherwise improving your financial standing. And while every individual and household is in some way unique, the following list of financial priorities for your next available dollar is a reliable guide for most. Once you’ve spent the money necessary to cover your fixed and variable living expenses (and yes, I realize that’s no easy task for many) consider spending your additional dollars in this order: 1. Create (or update) your estate planning documents. Your estate planning, or lack thereof, is unlikely to make headlines like that of the rich and famous. But the frightening implications of not planning for your inevitable demise lands it in the top financial priority slot, especially for parents of minor children. With extremely rare exceptions, every independent adult should have the following three documents drafted, preferably, by an estate planning attorney: a will, durable powers of attorney and advance directives (health care power of attorney and a living will). 2. Ensure that insurance needs are met. Don’t become the next heart-wrenching 20/20 segment because your family was left destitute after you died or became disabled without adequate insurance for such catastrophic events. Please note, however, the difference between insurance needs and wants. Surprisingly, most insurance needs — especially regarding life insurance— are sufficiently covered...
The Short Stories We Tell Ourselves About Everyday Spending

The Short Stories We Tell Ourselves About Everyday Spending

By Carl Richards I love a good story. In fact, I used to tell myself at least one new story every time I opened my credit card statement. “Oh,” I’d say to myself, “I was so busy last month, it makes perfect sense that I ate out a dozen times. I’ll just eat out less next month.” Other months, I’d invent a fantastic story about why I thought it was a good idea to spend so much on new bike gear. “Man, I really needed a new jersey,” I’d say. “The other 10 were in the laundry, and I had a ride the next morning.” Whatever story I told, they all had one thing in common: They were fiction. All by themselves, numbers tell a simple, straightforward story. We spent X on Y. Our credit card statements are a work of nonfiction. But we have a habit of spinning them into wonderfully complex short stories. We can’t help ourselves. For some reason, we feel the urge to embellish. We didn’t just spend $28.32 on lunch one day. We were helping out a friend who was having a bad week. That’s a great story, but it doesn’t change the numbers. We still spent $28.32 on a single lunch. The big purchases often come with the biggest stories. Imagine the story we tell ourselves (and our spouses) about the $4,274 charge for a motorcycle. Of course, we really needed it. Besides, a motorcycle is far cheaper than the sports car our neighbor bought for his mid-life crisis. So why all the storytelling? Our narratives provide a comforting counterweight to a hard...