Food for Thought

Understanding that Financial responsibility starts with “self” - trying to exercise ways to avoid major pitfalls is crucial to long term successful planning.  I found this interesting article by Laura Rowley - here's a few simple rules to live by:

Thou shalt not live beyond thy means. Almost half of Americans reported having trouble keeping up with monthly expenses and bills, according to a 2009 survey on by FINRA Investor Education Foundation. Nearly one-quarter reported overdrawing their checking accounts. Know exactly how much money comes in, how much goes out and make those numbers match up. There are a million creative ways to budget, but start by tackling your biggest costs – housing, autos (buy used, for cash), health insurance and for parents, child care.

Thou shalt set aside cash for emergencies. Only 49 percent of FINRA respondents reported that they had set aside funds sufficient to cover expenses for three months in case of sickness, job loss, economic downturn or other emergency.
Thou shalt not carry a revolving balance on thy credit card. According to the FINRA study, 51 percent of Americans have carried a balance from month to month resulting in interest charges; 29 percent made a minimum-only payment; and 23 percent were charged a fee for late payment. Thou shalt not get sucked into the debt-settlement trap.

Thou shalt not use a financial product without searching for the best deal. The FINRA survey found 63 percent don't shop around for credit cards, half don't shop around for auto loans, and a third don't shop around for mortgages.

Thou shalt save early and often for expensive goals. Only half of FINRA respondents had a retirement plan through an employer; 28 percent had another kind of savings plan. Only 41 percent of parents had saved anything for college. 

Finally, thou shalt not be overconfident whilst demonstrating financial ineptitude. When asked how good they are at dealing with day-to-day financial matters, half of FINRA survey respondents with credit cards and checking accounts gave themselves the top score of 7. 
However, a quarter of these respondents separately indicated they engaged in behaviors that generate fees or high costs, such as using credit cards for cash advances, paying late payment or over-the-limit fees or overdrawing their checking accounts. Among those who gave themselves a score of 6, 40 percent engaged in these wealth-destroying behaviors
 -- Laura Rowley