Signs of Wealth
by Gary Foreman
How to Waste Money
Before You Buy, Think Different
5 Tips for Getting Back on Track Financially
Everyone from songwriters to psychics to traffic engineers will tell you that it's important to "read the signs." And they're right. Take driving for instance. Traveling without signs would be difficult and dangerous.
Our financial affairs are another type of trip that requires watching signs. To help us avoid trouble and make progress towards our goals. So let's take a look at some common financial road signs.
The "Stop" Sign. Sometimes the best thing you can do is to stop before you make a purchase. And, just like when you're driving, you need to look around for oncoming traffic before proceeding. Failure to stop can cause an accident.
How can you identify the financial stop sign? Look for it any time that there seems to be too much traffic. If a decision is complicated, there's a lot of traffic. If you're facing many financial decisions at once, there's a lot of traffic. If you feel like you're being pushed, it's time to stop, look around and only continue with your purchase after you're sure it's safe.
The "School Zone" Sign. There are some situations that require us to drive very cautiously. There are financial situations like that, too. They require us to slowly and calmly evaluate a situation. Like the school zone, we need to be watching for the unexpected. Anytime that someone says you 'must act now' you should see a 'school zone' sign in your mind. And, just like with the school zone, failure to obey the sign can cause an unexpected accident.
The "No Parking" Sign. There are places in life that don't allow you to stop. Sometimes you just have to keep going. For instance, you can't park on the expressway. That happens with our finances, too. If you're struggling to make your monthly payments you can't 'park' your finances. You need to get behind the wheel and take control. It's time to steer carefully and watch where you're going until you're safely out of traffic.
The "Speed Limit" Sign. Many people dream of making a lot of money quickly. That's why lotteries are so popular. But those that try to get rich quickly often end up crashing. Just like driving too fast. Sometimes you can exceed the speed limit for awhile without a problem. But if you crash, it's often pretty nasty.
The 'speed limit' sign isn't as easy to spot as some of the others. Often it is just a feeling that you're going too fast for the circumstances. For some reason women seem more aware of financial speed limit signs.
The "Route Marker" Sign. Major highways have signs that reassure us that we're on the right highway for our destination. If we don't see the route sign for awhile we're probably going the wrong way. This, too, is true in our financial life. If you're saving for retirement you need to take a look at your retirement plan statements. Make sure that you're headed in the right direction.
The "Exit" Sign. Missing an exit on the interstate is a real pain. Often it happens when you haven't studied a map to check where to get off. And, once you've missed your exit the only thing you can do is to backtrack.
Our financial life also has some exits that we don't want to miss. If you're accumulating debt you need to take the next exit. If you're beginning to suffer 'burn-out' it's time to stop and visit a roadside diner to check your destination. Some exits, like paying for college, are well-marked and easy to spot. Still, you need to prepare to make a safe move to the exit ramp.
The "Merge" Sign. When you see a 'merge' sign you know to watch out for traffic from two lanes blending into one. We need to look around for cars coming our way. And then speed up or slow down to avoid an accident.
That can also occur with our finances. Changes in work, health, marriage or education status are a sign that new situations are merging into our life. Hopefully we're ready to handle the new events, but ready or not, we need to evaluate them now and see what effect they will have on our finances. And, once we've studied the situation, we may need to speed up or slow down. That might mean changing our investments or the amount that we routinely spend.
Can reading the signs prevent every problem that you might face? No, unfortunately that's not possible. But they sure can make the trip easier and less stressful!
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and he's a regular contributor to CreditCards.com. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.
Also in Money
- 6 ways to pay off credit card debt
- 10 sure-fire savings tips for 2014
- Do you really need an emergency fund?
- Taking a short-term loan from your IRA
- Negotiating a divorce settlement
- The high price of waiting to save