So close to the finish line! How are you feeling today? We are all on this roller coaster together, let’s hope these live streams are helping you feel confident with your financial choices at least. Today Pete covers his own personal financial standards and why you should determine yours as soon as possible.
Standards are another way of saying rules, boundaries, or whatever other word that means “this is what we do”. Vegetarians have a standard of not eating meat, that’s the rule for them. To you this may seem like a difficult choice to live by, but if you ask a vegetarian it’s likely they don’t think twice about it anymore. It’s a standard they have established and it’s not a daily decision they are making anymore. It just is. I think this example illustrates something important about standards — they aren’t hard. Maybe at first when you set a new standard for yourself or your family there will be an adjustment period, but once you settle into it, it’s second nature. Financial standards should be like this too. Most people just don’t take the time to set them in the first place. Now that you have nothing but time and the financial world is collapsing around you there is truly no better time to establish your financial standards. Here are the main categories you should establish standards:
For Pete, this standard is all about retirement. Not just “saving for retirement” but a very exact number that is contributed each pay period. Your standard can be “retire with 3 million in the bank”, but this must be backed up by determining exactly how much needs to be put away each pay period to get there. A good standard is all about data. Even the 3 million used in this example can’t be a guess. The numbers must be supported by your lifestyle and inflation. Especially for investing you want to leverage experts for help. If you have a 401k through work it’s likely you have a helpline to support your questions. If not, you can use our Hey Money experts to help you run retirement calculations. They can’t help you invest your funds, but they can help you get the supporting data you need to make smart decisions.
Pete’s standard for savings is to always have a fully funded emergency fund. This means any time it’s used for any reason, his priority is to fill it back up as soon as possible. If this is your standard it means making hard choices like using your tax refund or stimulus check to fill your savings even when other uses are more tempting. Other types of savings standards could be a certain percentage of income set aside for kids’ college or saving for a vacation before booking.
For Pete, his standard is no credit card balances. And using this as a debt standard is a good example of how NO ONE ELSE CARES ABOUT YOUR STANDARD. Commercials will still play, offers will still come in the mail, your favorite celebrities will still do endorsements, and trips and purchases you can’t afford will still tempt you to swipe your credit card. When you choose your standard it has be something you are willing to stick to no matter how much peer pressure you face.
Lastly, Pete’s standard for insurance is to always have 10x his income in life insurance as long as the kids are living at home. Yours could be to always carry disability because you’ve seen the impact of not having it on a family member. It’s likely your mind didn’t automatically go to insurance as a financial standard, but it’s important to consider adding one for this category. Insurance is a huge part of a solid financial foundation.
It’s important to remember that no standards = no plan. Take some time during this period of isolation to establish your household financial standards and then create a plan to meet those standards for the rest of your financial life.
For more personalized guidance don’t forget that a Hey Money expert is always ready and waiting to help you sort out this mess. Use code ‘cheese’ to get a 10% discount on a monthly subscription just for being a part of the 30 day recession-proof your life program. Stay strong!
Tomorrow is the last day of this program! To catch the live broadcast like the Hey Money Facebook page to be alerted when Pete goes live at 2:00 pm EST.