By: Revanche

The Finer Things

January 26, 2007

(the Steve Winwood version)

I wandered into a conversation that a train friend was having with another rider about retirement accounts and ways to make up time for late starters in the retirement game. IRAs, real estate deals, and pensions were being bandied about as though they would be funded just by talking about them. But I felt distinctly uncomfortable about the fact that a budget and the necessity of learning how to control your money instead of letting it control you were never discussed. Granted, the advisor didn’t necessarily know his advisee well enough to discuss her budget, so maybe that’s why he didn’t touch on that subject [yes, I note the irony of a PF blogger saying that budgets are too personal to discuss with strangers ….] but I feel that creating wealth and income is only half of the strategy. No retirement planning can ever be complete without addressing the other half of the money equation: how, how much, and when is the money spent?

How: Who’s the spender, and why? Are the purchases necessities with the occasional splurge? Are they “wants” with the occasional bill thrown in? You need to know why you’re spending, before you can modify the behavior that makes the spending ok. Maybe it’s just as simple as “I want.” If that’s all it is, how do you replace “I want” with “I want this, but I don’t need it right now”?

How much: Are you spending beyond your means right now? Are you spending at your means now? Are you spending below your means? This determines how much you need to retire AND how much you can have by then.

When: When do you want to retire? Do you know how much you can save before then? Have you considered your life events between now and then?

It may sound pretty complicated, but it can also become a very simple conversation to have with yourself. I have it every so often to remind myself that I have bigger things to worry about than how the new girls are so stylish it makes my teeth hurt.

It especially helps to repeat the mantra “You don’t NEED another purse. You just WANT one!!!!” when I get emails from one of them, touting her friend the handbag designer in New York and her faaaaaabulous purses. And how her purses are pricey because they’re made in the US, but she has defective, or imperfect purses that she’ll sell at a discount [I’m not sure how much “for cheap” is]. *sigh* I never thought of myself as an accessories girl, but there’s something so deliciously satisfying about the perfectly sized purse that holds my wallet, keys, book, planner and a water bottle and every so often the 17 year-old dog who refuses to walk anywhere he can be carried. It just panders to my need to have everything at my side at ALL times.

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