Five Easy-To-Follow Principles To Safeguard Your Financial Future

Ron Lieber kicks off his inaugural Your Money column by presenting five excellent principles to help guide your financial decisions.

  • Simplify Your Investments: Let day traders slave over charts and dodge heart attacks. Stash your cash in an index fund and watch your money grow effortlessly.
  • Occasionally Pay For Help: Investing is one thing, but taxes and other potentially complex arrangements sometimes call for professional help:

    Perhaps the best thing a versatile professional — whether it is a financial planner, accountant, stockbroker or lawyer — does is provide discipline. It is difficult to get most of this stuff right. And to get it done at the right time. Professionals help make sure it all happens on schedule.

  • Read Consumerist More Often: Especially to research companies before making large purchases. Use this guide to see how editors research topics we’ve already covered.

    And take a bow, commenters: “both the blog posts and the comments” are a valuable source of information.

  • Automate Everything: Auto bill bay is an adorable skunk, cute until it stinks. Auto bill pay makes paying your bills oh-so easy, but any errors are immediately charged to your account. For those who want the convenience of auto bill pay without remaining liable for someone else’s mistake, consider directing all your bills to your credit card. You’ll pick up rewards and build your credit history, while retaining the power to fight errors with chargebacks.
  • Talk!: Talk openly about your finances with your family. “If we do not know what is coming, we cannot help them plan for it.” Ask your parents about their retirement plans and adjust your savings accordingly. Likewise, imbue your children with an understanding of finances so they can catch you if you slip-up down the road.

What principles guide your financial decisions? Share your pillars in the comments.

Five Basics for Building a Solid Financial Future [NYT]
(Photo: Dr. Hemmert)

Comments

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  1. Kevin Cotter says:

    I don’t want auto-pay because I don’ trust many companies to NOT screw it up. I also suggest reading The Simple Dollar for ways to save money and rethink your spending habits!

  2. CumaeanSibyl says:

    I’m important!

  3. planetdaddy says:

    I have found that some companies will cut you a break if you sign up for autopay. Have had it on my mortgage and insurance for many years. No mistakes.

  4. humphrmi says:

    I auto pay my mortgage and that’s it. But I also use Quicken’s electronic bill paying to simplify bill paying. (Not trying to be a shill here – Quicken sucks like everyone else, it’s just the flavor of suck that I’ve chosen…)

    I sit in front of the computer for an hour a week, pay all bills that have come in, hit “send”, it sends the payments and downloads all my transactions that have cleared that week, then I reconcile my accounts in 2 minutes, and I’m done.

  5. Half Beast says:

    I’ll endorse one of those points by saying ‘paying a small fee for professional advice/oversight is usually sound policy.’ For the first time, this year, I paid for professional tax assistance, and dude managed to net me an additional $380 on my return. YMMV, but it should be considered if you have diverse investments.

    Also, KITTY!

  6. forgottenpassword says:

    I refuse to use automatic billpay & always have. I pay as many bills I can with my credit card (unless they charge a fee to do so). I pay 3 bills a month with checks… everthing else is paid with a credit card with a cashback benefit.

  7. ottawa_guy says:

    I would never have auto-bill pay because all of the time there is bound to be an error in it. The only time I have to use it is when there is no other option to choose.

    With one company I deal with, I get professional music CD’s for radio airplay (I run streaming audio stations). My bill is $208 and some change every month, and it comes out around the 3rd.

    Last year, I changed my contract and renewed with another 3 year term. That took my old price of $125 and some change to $208. Well the billing date came in, and not only did they bill me once, but they billed be not twice, not three times, but four times! Spoke to accounting, and was told the automated system was registering $0 payments.

    Therefore, I will use my credit card and manually pay when available. I get cash back which is nice. Earned about $50.00 this month cause some relatives wanted to buy furniture, and I told them give me the cash and I will use my credit card to do that, so you will have the added protection of it.

    It’s always wise to have a saving plan. I am only 20 and already contributing to retirement savings plans (like a IRA in the US) and thats done via auto transfer to another account, which is nice and you don’t even know the money has left you. It’s great for the tax writeoff.

  8. ColdNorth says:

    I use automated debits for only two types of payments: Mortgage and auto loans. Both are defined in the number of payments, entail working with a dedicated specialist within the company if the loan is paid early, and entail significant and potentially dire consequences if payments are missed.

    Otherwise, everything goes on a credit card or paid online.

    The only place I ever use paper checks is to pay for property taxes and school field trips for my children.

    Indeed, online banking is phenomenal. Cash management is a snap and transferring funds between accounts is a breeze. Now anybody can practice “treasury management”, even if the numbers are on a different scale than large businesses.

  9. “Investing is one thing, but taxes and other potentially complex arrangements sometimes call for professional help”

    And for other people, taxes are one thing, but investing calls for professional help! IOW, know when you don’t know wtf is going on.

    When I teach business ethics I always set aside a day in the investment section where I explain mutual funds, 401(k)s, Roth IRAs, building portfolios, and how to get more help, since MOST of my students (a solid majority, every semester) have simply not been introduced to the concepts, and most of them are now working at a job with a retirement plan, or will be shortly. We talk about such basic things as why it’s a bad idea to invest all your money in your employer, what a mutual fund IS, why diversity in investments is generally a good thing, etc.

    Most of my students are totally capable of doing their own taxes, and have been doing them for years. Most are totally intimidated by investing, and some don’t even participate in retirement plans because it’s all total gibberish and they’re either too embarrassed to ask, or don’t know who to ask.

    Some employers provide this kind of assistance, but most don’t, and some provide it badly.

  10. wring says:

    bf yelled at me for nerdily writing “see cash” on restaurant credit card receipt. i told him about teh tipping shenanigans that could happen if i left the tip field blank. learned that from the consumerist! im not gonna be a statistic!

    automated payment is bullshit. i set monthly reminders on my phone for bills.

  11. chrisgeleven says:

    I use my bank’s bill pay to automate the bills that do not change from month to month (rent, student loan payments, car loan, etc). That way, I can easily adjust the amounts when necessary (paying extra on my car bill, rent going up, etc). In over four years of using Bank of America’s billpay, I have never had a mistake happen. Not once.

    I do not trust companies from automatically drawing from my bank account. That is an accident waiting to happen.

  12. wring says:

    oh and welcome back carey! we missed you

  13. Charles Duffy says:

    I use (and am fairly happy with) PayTrust. They either retrieve your bills online or will receive paper copies at their facility, and then will respond via a set of rules you set. Want to auto-pay any phone bill up to $150 but require approval of any above that amount? Easy!

    Because they’re representing me (rather than the payees), I’m in control. I find the subscription fee well worth it in light of no longer needing to manage paper bills.

  14. Dustbunny says:

    Kitty sez: save money on unimportant stuff so u can afford to buy me the gushyfuds I like!

  15. ConsumerAdvocacy1010 says:

    Auto pay on a credit card works for me. You have the ability to dispute charges and do chargebacks. Also, the charges give me points/rewards for cashback!

    And I pay in full each month. So auto pay is good (but only with credit cards).

  16. ohiomensch says:

    I have had recently had trouble with my AMEX. I had an automatic payment set up through their website so that the payment would be deducted from my checking on the due date each month. I thought, this way, it would never be late. What a nightmare it turned out to be. A payment was due on the 2nd, I checked my bank to see if it had posted, or was pending on the 5th, nothing. So I went on Amex website to see why it wasn’t paid. Somehow, when I went into the billpay area it processed a second payment. It clearly said there were two payments in process. There was no way to reverse it online so I called them. For over an hour I was on the phone with them. No way they would reverse the second payment. The CSR advised me to cancel it with my bank, so I did. Somewhere in the loop AMEX processed only the second payment, the first one disappearing into thin air apparently with no record that it had ever existed, and the one remaining payment was reversed by the bank. So I immediately made a third payment over the phone.

    The end result of all this, my payment was deemed “late”, I was charged a fee for that, then they re-asessed my account and lowered my limit to $300 below my current balance, advising me that no overlimit charge would be assesed as long as I paid them the $300 + my next months payment within the next 30 days. Sweet. Thanks Amex. So as soon as I pay this pig off, I am done with credit cards for good.

  17. Scuba Steve says:

    I play the lottery. Sure, the odds are good that I’m wasting my money, but at least there’s a chance!

    //A dollar a week, max.

  18. ElizabethD says:

    Someday when I get a cat, I want one exactly like the one in your photo. Awesome!

  19. KarmaChameleon says:

    I have absolutely nothing to add except OMG KITTY.