For others, the task will be to reassess your very way of life. For many of you, the challenge will be to rein in your family's spending. Which is why the way your family spends and saves money, and how money flows through the generations of your family, may need to be revisited. Combine these factors with poor returns on your retirement portfolio and a decrease in your home value, and you have real cause for worry. You may also find that your grown children and elderly parents need financial assistance. A layoff or a position that hasn't produced a raise in recent years can make you feel like it's becoming harder and harder just to get by. In this day and age, even families who are financially responsible are being hit by punishing economic headwinds. In each of these situations, your rationale seems irrefutable: You give out of love, because that's what family is all about, right? But the truth is, there's no way to build sustainable dreams on a foundation of financial dishonesty. When you tell your kids to focus on getting into the best college regardless of the cost even though you'll have to spend your retirement savings to cover the bills, you're being dishonest about the severity of that sacrifice. When you deplete your emergency fund to help your sister cover her chronic financial shortfalls, you're lying to yourself and your sister about whether you can afford to help her-or that you even are helping her, rather than merely enabling her irresponsible behavior. When your credit card bill is full of purchases you made because your kids asked for something, you're lying to yourself and your kids about what your family can afford. We sacrifice the wrong things for the right reasons, putting our financial security at risk to make someone we love happy. But too often these hopes lead us astray. We want our parents to reap the benefits of a lifetime of hard work and live out their golden years free of worry. We want our children to have endless opportunity, to be able to achieve and create and flourish. In this excerpt from The Money Class, Suze Orman explains how to nurture a financially savvy family. SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.ĬHECK OUT: ' Shark Tank' winning CEO recommends 3 high-paying side hustles you can do from home via Grow with Acorns+CNBC.ĭisclosure: NBCUniversal and Comcast Ventures are investors in Acorns. The more money you put into a retirement account and the more years that retirement account gets to grow, the more money you will have to live comfortably in the future. If you cut back on unnecessary expenses today, you will have more money to put into a retirement account. "If you are younger, now is the time to cut back," Orman says. That means retirees may now have to cut back their lifestyle because "they have to ask less from their money because there's no way for them to get more money," she says. "There is no place for them to get a good interest rate, no safety because of the stock market," Orman says. Many people retiring now can't rely on high interest rates. Look at the current circumstances, for example. Especially since the investing environment may not be ideal when you're getting closer to retirement age or already retired. More from Invest in You: 7 steps financial experts say to take now that the extra $600 unemployment boost is ending Mark Cuban: 'Everyone is a genius in a bull market' Hands off that retirement money until you scout through all the optionsįiguring out your wants versus your needs and cutting back on spending on those wants earlier in life can be critical to saving enough for retirement, Orman says. "Try that for 21 days and you will be shocked at how much money you can save," Orman says. What's the difference? If you're hungry, for example, dining out at a restaurant is probably a want, whereas going to the grocery store to buy food is a need, Orman says. If it's a need, you have to buy it," Orman says. "Every time you walk into some place, ask yourself: Is this a want or is this a need? If it's a want, walk away. To help you get better at identifying the items you really need in your life, Orman recommends trying a simple challenge for the next 21 days. Of course, sometimes that distinction can be tricky to figure out. That means only spending on what you actually need to get by, rather than on the things you just want.
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