If you want to feel better about your finances today, spend some time thinking about how you’ll pay for tomorrow.
ADD UP YOUR FIXED LIVING COSTS. Include mortgage or rent, car payments, property taxes, insurance premiums, utilities and other recurring monthly expenses. How long could you cover these costs if you lost your job? Are these expenses so high that you find it tough to save—and suffer constant financial stress? My advice: Keep fixed costs below 50% of pretax monthly income.
MAKING SMART PERSONAL FINANCE decisions involves lots of homework. Fortunately, there are plenty of great resources out there, both aspirational and practical, to help us figure out what to do. Here are my five favorite money blogs:
The Billfold is a personal finance site brought to us by The Awl, the trend-bucking culture blog favored by media industry types. On this idiosyncratic blog, you’ll find refreshingly human takes on everything from the unexpected costs of getting a divorce to receiving an inheritance.
IT’S ONE OF WALL STREET’S more galling rituals: its regular dismissal of everyday investors as stupid. They’re the “dumb money” you should watch so you know what not to buy—the sheep that the “smart money” regularly fleeces.
This narrative was bolstered by early behavioral finance research, which detailed our many mental mistakes: In our overconfidence, we trade too much and make large investment bets. We’re overly influenced by recent returns. We assume our investments perform better than they really do.
WHEN THE WORLD SEEMS A LITTLE CRAZY, we strive for greater control over our lives, including our financial lives. But the greater control we feel is often an illusion and the steps we take can badly hurt our finances. Want to learn more? Check out my latest article for Creative Planning.
Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His latest book: How to Think About Money.