FEATURE STORY/PERSONAL FINANCE 2024
PART 4: YOU
7 Things Not to Do to Stay Financially Healthy
Sometimes the big threat to our future security comes from within. So steer clear of these self-inflicted wounds
AMERICAN HOUSEHOLDS headed by someone 65 or older spend about $4,800 per month on average, according to the Bureau of Labor Statistics. So splurging on a big-ticket purchase or dropping the ball on home maintenance chores can cost you a few months’ worth of retirement funds. Watch out for these minor actions you might take—or fail to take—that can create major difficulties later on.
MISTAKE #1: SHOWER THE PEOPLE YOU LOVE … WITH MONEY
It can be hard to tell relatives that you have to rein in your giving. Sit down with your family before there’s a crisis, and be honest about what aid you can give, says Lena Haas, head of wealth management advice and solutions at Edward Jones. “Small course corrections can generate big benefits,” she says.
MISTAKE #2: DELAY DECLUTTERING
Are you paying $150 a month for a storage unit you’ve hardly visited in years? “When the cost of storing items outweighs their value, you need to think about getting rid of stuff,” says Los Angeles financial planner Patrick Whalen. It’s best to start decluttering well before you downsize or relocate, which could save hundreds of dollars or more in moving costs.
MISTAKE #3: LAP UP THE LUXURY
Before you spring for that European sports car or total kitchen makeover, calculate how much you’ll need to live comfortably in retirement, including costs such as housing and health care. (You can find retirement budget worksheets at Vanguard .com and TIAA.org.) Perhaps by opting for a more modest car, you can afford other treats and still have more money to invest in your future
MISTAKE #4: PANIC ABOUT INVESTMENTS
Perhaps you’re worried about a market crash. Or maybe you want to catch a ride on a soaring stock. You might end up selling at a loss or taking disastrous risks. “People tend to assume that what is going up or down will continue,” says Meir Statman, professor of finance at Santa Clara University and author of Finance for Normal People. But history shows no one can consistently predict the market. “Use a two-week cooling-off period before you buy or sell,” Statman says. “Chances are, the urge will have passed.”
MISTAKE #5: SKIP YOUR CHECKUPS
Preventive care is often free or low cost, and catching problems early can head off more expensive treatments later. Ask your doctor why a test he or she recommends is necessary, and learn why you’re taking a medication, plus how and how long to take it, says Carolyn McClanahan, a financial planner and physician in Jacksonville, Florida: “If you’re an engaged patient, you can be better assured you’re spending your health care dollars wisely.”
MISTAKE #6: PINCH PENNIES ON HOME MAINTENANCE
A bit of time and money spent on basic home maintenance tasks can prevent costly repair bills. For example, a gutter cleaning might run $150 or more; regrading around your foundation to avoid water runoff into your home could cost $1,000. But those steps will help reduce the risk of incurring thousands more in damage from leaks or basement flooding.
MISTAKE #7: SPEND ON AUTOPILOT
People surveyed by C+R Research in 2022 thought they were spending an average of $89 a month on subscriptions. But a review of their bills found the real cost: $219 a month, mostly for streaming services. To keep better tabs on your subscriptions, you can use apps such as PocketGuard and Rocket Money; some credit card issuers, including Chase and Capital One, have tools for tracking subscriptions.