Live, and Let Live…Spend, and Let Spend: What Does Living the Good Life Mean to You?

By Beth Kobliner

One of the biggest concepts in behavioral economics these days is the role that “choice” plays in our financial lives.

Sounds obvious, but it’s the simple idea that we have a finite amount of money, so we need to choose wisely how we spend it if we want to live a life that we consider good.

But what really is the “good life?”

In August’s Journal of Socio-Economics (yes, I confess that I read it for fun!) there was an intriguing book review of How Much Is Enough? Money and the Good Life by R. Skidelsky and E. Skidelsky, a father-son team—the dad: an economist; the son: a philosopher.

In the review, researchers Benjamin Nienass of Yeshiva University (New York) and Stefan Trautmann of Tilburg University (the Netherlands) outline those factors that the Skidelsky team believe to make up the good life:

“Health; security (low uncertainty in life); respect; personality (autonomy); harmony with nature; friendship (community, social capital); leisure (goal-less activity)…”

I thought this was a compelling list. Certainly more thoughtful than beef tacos and beer on a Sunday afternoon while watching football—many of my friends’ notion of living the good life.

But the reviewers then go on to say that this one-size-fits-all definition may not really be right. They argue that everyone’s view of the good life can be varied, and you can’t really account for the trade-offs that people are willing to make in such a list.

“A doctor,” the reviewers write, “ who feels called to help people may be willing to work 60 hours, sacrificing leisure and family life. Will he subscribe to this definition of the good life?”

This got me thinking about my own upbringing and the choices that my parents made in order to give us their version of the good life.

As I mentioned in my last column, my parents were frugal in a good way. They made smart decisions about spending money that allowed them to live the life that they wanted to live.

We certainly did not have everything we desired, but we definitely had what we needed.

Though they were careful with cash, they didn’t scrimp on those areas that really mattered to them. Healthcare was number one—damn the cost.

We saw the very best doctors even if we had to go outside the network of my dad’s healthcare plan. (Of course, 20 or 30 years ago, healthcare wasn’t nearly as expensive, but it was still a big cash outlay for my dad, an educator, and my stay-at-home mom.)

Weighing Priorities

Another priority: living in a comfortable home. That’s not to say that they didn’t hunt around for the best sale price on furniture or appliances. They sure did. (I recall many a Saturday evening trudging through a mall or department store as we compared prices on big-ticket items.)

But they believed that buying a quality refrigerator or a well-designed central AC system was incredibly worthwhile—even though buying such higher priced items was not routine in most families in the ‘70s.

Their logic—and mantra: We spend 365 days a year—minus a small, local family car trip here or there—in our modest home, which should be our family’s comfortable refuge.

Read the full article online. 

 

5 Financial Habits That Will Change Your Life

By Credit.com

With 2014 underway, New Year’s resolutions are a dime a dozen.

Study after study concludes that annual resolutions are rarely kept. In the words of Mary Poppins, resolutions are like a pie crust promise — easily made, easily broken.

Resolutions aim too high. While getting out of debt, spending less, and saving more are admirable goals, they do little to change our day-to-day actions.

Instead of lofty resolutions, we need to change our core habits.

Here are five habits to develop in 2014 to significantly improve your finances.

Track One Expense

A lot of people hate to budget. Tracking every dime spent is tedious and often unhelpful.
Just because one knows where they spent their money doesn’t mean their budget actually influences their spending decisions

Instead, develop the habit of tracking just one spending category. Pick an expense that you believe may be a problem area for your budget, and keep track of spending in just that one category.

Once you get spending in that category under control, start tracking the next expense that’s causing you to blow through your budget.

Audit Your Monthly Bills

We’re taught to check the batteries in our smoke detectors twice a year when the time changes.

Likewise, make it a habit to examine your monthly bills. You may find that you can get rid of services you don’t really need (e.g., 500 channels of cable you never watch) or at least reduce the cost.

I call this the One-N-Done method of saving because you make just one change that saves money month after month.

Automate Saving

One of the hardest habits to develop is saving and investing money.
Fortunately, we can easily automate this process, which makes developing the habit of saving much easier.

You can automate the building of an emergency fund by setting up monthly transfers from a checking account to a savings account that pays a decent interest rate.

Even better, sign up for your company’s 401k or an IRA and have money set aside each month automatically.

Learn Daily

Build learning into your daily routine. That may mean spending 15 minutes every day reading a book about finance or your career or a side business.
It could mean following blogs relevant to finances or your chosen career.

Successful finances and building wealth are about more than spending less than you earn and saving for a rainy day.

You need to learn how money works, and have a good grasp of the fundamentals if you want to turn your money into long-term wealth.

Track Your Progress

You can’t improve what you don’t measure. The measuring stick for finances is a personal balance sheet, which lists what an individual owns and owes.

Commit to updating your balance sheet every month. It takes just a few minutes, and this habit will cause you to refocus every month on your financial progress.

To make it even easier, there are free online tools you can use to track your investments and debts automatically.

In the words of Aristotle, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” The same is true for financial freedom.

“5 Financial Habits That Will Change Your Life” was provided by Credit.com.  

Read the full article online.