How Good and Smart People Make Big Money Mistakes + How to Make Things Successful

These  days good people fall into financial pitfalls, However I read  how to safe guard yourself  in one of the best posts I have read in a very long time.  In my job of helping people with many of the issues were money related . I soon began to detect recurring themes, certain pieces of advice that the Trent offers would have helped those I have helped and all of us in the near future.

Here are the main points I took away:

Monthly meetings- Partners should “..have monthly meetings about their financial situation. Just sit down and talk about it. Go through the checkbook registry together and the bills together and just make sure that everyone is aware where the money is going and why it’s going there…’

Set goals -Partners should discuss “…about where you want to be in five years. In ten years. In twenty five years. Figure out what each of you wants individually, then look at the areas where they overlap. Compromise a little bit and come up with detailed plans for things that you both want and you’re both willing to work towards…”

Put everyone on a spending allowance. Seriously. Each person gets a certain amount to spend per week (or month). This requires honesty and commitment from both sides, so the best way to do it is to regularly talk about it. Agree to a spending cap for each of you and then discuss any spending beyond that.

Don’t mix lending with family. “..If you want to help a family member with their financial situation, make it a no-strings-attached gift and forget about it. If you’re under the expectation that a family member is going to pay you back, you’ve changed a loving and caring relationship into a business-like lender-borrower relationship..”

Everyone needs to -“., build an emergency fund. Start an automatic savings plan – as discussed in the section about living paycheck to paycheck – and don’t touch that money unless there’s a need. Having that flexible cash on hand makes emergencies much easier to handle. Plus, such an emergency fund (once it becomes normal and routine) can be the beginnings of a bigger savings goal, like saving for a house down payment…”

Have a healthy emergency fund -“.helps with the short term of either scenario, and a solid life insurance policy and a long term disability insurance policy will take care of the needs in each situation. If you’re young and in reasonable health, both types of policies can be quite cheap and they protect you against any such disaster. A long term care policy (one that covers the costs associated with your care if you require significant medical and personal care to survive) can also be useful…”

Have your children earn money in exchange for tasks done, and eventually build them towards small-scale entrepreneurship, like in the book Young Bucks. When they do earn money, have them set aside some for giving to others and for long-term savings goals so that they understand the usefulness of saving the money…”

Diversify Investments-, “…especially as you get closer to retirement. If you don’t know what you’re doing, put your money in a “target retirement” option that’s close to your retirement date so that they can auto-diversify for you. Do not hold more than 20% of your retirement savings in a single stock – I’d be nervous holding more than 10%…”

Resource The Twelve Biggest Personal Finance Mistakes People Make Over and Over Again-Written by TrentThe Simple Dollar

My hope is that we all will reach our hopes and dreams,

Devin

Related and helpful Resources

I Love Talking with Our “Prosper Learning” Coaches!Posted by Devin Willis My Discoveries on the Road to Prosper and Learn

Six Invaluable Online Resources For Personal Finance Education-Written by TrentThe Simple Dollar

Principles of Wealth Building Via Prosper Learning Coach Posted by Devin WillisMy Discoveries on the Road to Prosper and Learn

Nate Moller – Nate, of Prosper, Inc, blogs about e-commerce for small businesses & startup consulting.

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3 Comments

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3 responses to “How Good and Smart People Make Big Money Mistakes + How to Make Things Successful

  1. Pingback: The Car insurance blog » Blog Archive » How Good and Smart People Make Big Money Mistakes +And How to Make …

  2. ama49

    Very, very good insights. My wife and I are currently reading a book by Mary Hunt called “Debt Proof Your Marriage” that has many of the same concepts you describe.

    I also wrote a post about managing finances over at my blog:

    http://graceforgrace.com/2008/07/30/11-steps-to-putting-the-lord-before-your-money-and-getting-out-of-debt/

  3. Haley Bailu

    Took me a long time to understand money and blogs like yours help!

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