Thursday, February 5, 2015

What You Expect May Determine Financial Contentedness

Everyone hopes to be able to have a little more than they have now. It is human nature. Having reasonable expectations for your stage of life, for your retirement and your children’s education can get a big influence on how content you feel with what you have.

Consider the following examples:

1.  Your home: If your parents live in a 6,000 square foot homes on a half-acre lot in a gated community and you think that you should be in a position to start out the same thing, you are likely to be disappointed and frustrated. Figure out where your parents had their first home. Go sees it if you can. Set expectations for what a primary home should be. If your parents were both MDs and you’re a school teacher married to an artist just launching a career, you may need further adjustment to your expectations. Take some time to really understand what lifestyle you can afford and work to align your expectations with what’s real.

2.  Your car: Cars are crazy. Some people would rather own a nice car and live in a tent than drive an old clunker and have a home with a garage to park (or hide) it in. That means that you can find some unusual reference points, like the kid delivering pizzas in a BMW. You have a duty to set your expectations for your car in the context of your personal priorities. If you want to do a home and that’s a stretch, you’ll probably be driving a modest car for the next several years. Own your choices and don’t be ashamed to drive an affordable car.


3.  Your kids''s college: You may want to send your kids to college at Cornell. But Ivy League tuition isn’t cheap. Even if you get an above average household income, tuition, books, room and board at an Ivy League school may be now a man with no reach—at least without piling on the debt. On the other hand, attending a state school near home may provide a much more affordable education and one that still open doors of opportunity. Many people have found that an undergraduate degree from a good state school can still qualify students for elite graduate school programs.

4.  Your retirement: You may want to retire at 50 and live between the beach and the golf course in Hawaii, but unless you have extraordinary good fortune, retirement will come closer to 70 and you’ll find it wise to move to a smaller home or condominium when you do. If you plan and prepare well for the equitable retirement plan, you’ll be the most likely to take advantage of it when it comes. If you have dreams of extraordinary luxury and an early retirement, you might coax yourself into taking investment risks that not only don’t achieve the goal of providing for an early retirement, they could instead leave you without the resources to have the reasonable retirement you deserve.


As you get a little look at your circumstances, it is advantageous to aspire to have a little more, to work and save and plan for the future. You may doom yourself to a perpetual state of disappointment if you expect things to obtain much better than you can reasonably expect. If fortune smiles on you, it will be not difficult to adjust to having more money; plan and prepare for less and you’ll enjoy life more.



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