Jonathan Murray: Scrap the household budget
The well-known Baltimore stock broker and financial adviser is a guest blogger on The Baltimore Sun's Read Street reading blog today.
His advice includes:
-- I'm giving you permission to NOT do a family budget. This runs counter to many financial planners, who will probably tell you that before you do anything, you need to get on a budget to monitor your expenses.-- Instead, I'm going to ask you to do something much simpler, requiring much less time on your part, that will allow you to reach your financial goals…are you ready? I want you to save 15 percent of your income, starting immediately.
-- You see, saving 15 percent, or surviving on 85 percent, are the same thing…it's just a question of perspective. And, unlike doing a budget, once you put your savings plan on autopilot, it's simple. I didn't say it'd be EASY, but it's simple…just have 15 percent of your pay automatically direct deposited into your Roth, your 401(k), your savings/investment account…whatever your goals are, apply those monies there.
Comments
Wonderful advice from another in the endless list of dubious financial "advisors." Let's see, put 15 percent of your income in your 401k and watch it decline by 40 percent. That's like taking 6 percent of your income and tossing it to the winds. Related question: What has the stock market done in the months since revered investor guru Warren Buffet told people, via an op-ed in The New York Times, that now was a good time to invest in the stock market?
Posted by: penny pincher | January 10, 2009 2:22 AM
Hmmm... 15% into 401(k)? I just got laid off. My daughter is sick. 20% of our remaining income goes for COBRA payments and medical costs. Thank God I moved my 401(k) when the company was acquired. If I hadn't, I would have lost 50% of 9 years of retirement savings. If the company had not been acquired, I would have been forced to lose those funds. So much for the wisdom of 401(k).
Posted by: Jack Oak | January 10, 2009 3:46 PM
I just received my year end statements and investing went really well - the thieves and liars on Wall Street really did a nice job.
Posted by: save_the_rustbelt | January 12, 2009 10:15 AM