I've often wondered the why behind people's financial decisions. Behavioral finance is a growing field and a great marriage for someone like myself; my Bachelor's degree is in Psychology, but I have a career in finance. The intention of this post isn't to cast judgement, but rather to entertain the question of why people justify paying more for certain expenses than they save for their future, cable or satellite television being a great example.
Cable rates vary across the country, but in general, basic service costs around $50 a month excluding fees and taxes. Most people I know, if surveyed, would answer that they spend in excess of $100 per month (we were part of this group a couple years back). If you add this to cell phone and Internet bills, there are a lot of technology related expenses that didn't exist 25 years ago. Typically these won't be phased out or decrease as we age; my inkling is that they are only going to become more "necessary" and expensive as time goes on.
According to this article from Dave Ramsey's website, "the majority of American workers, 69 percent, have less than $50,000 saved for retirement -- 36 percent have less than $1,000." In that 36 percent, there are likely many that have nothing. There are reasons for this of course -- some good, some not so good and others not by choice. As a whole, it's my belief that our country isn't on track for retirement. Why?
Entertainment fills a "need" TODAY, whereas retirement is eons away. Pensions and social security used to take care of people handsomely, but due to companies not being able to keep up with previous entitlements (much like our social security system), they are the "old" way of obtaining your retirement paycheck. Neither of these methods are going to be around to the same extent (if at all) for Gen Y/Millennials, which means that we really need to take the reigns for our own financial future.
Like everything else, it's all about balance and prioritization. We've all heard the benefits of starting to save early; it doesn't matter your age, you should be thinking about today's decisions and their impact on your future. I don't have any new advice for you, but here are a couple of questions you may decide to ask yourself in relation to this topic:
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Vibe: Old West; urban flair Mingle with the natives: By sharing a bike. The city's new bike share program lets you pedal all over town for just dollars a day. Sunny days per year: 227 Best daytime lark: El Mercado (which the city claims is the biggest Mexican marketplace outside Mexico) in Old Market Square. Median home price: $135,000 Local flavor: Brunch at the Mad Hatter's Tea House and Café, with a $10 fishbowl mimosa Impress friends and family with: The endless selection of restaurants and patio dining on the famous River Walk
Vibe: Midwestern cozy with a high-tech spark Secret affordability sauce: Millionaires with a conscience. Thanks to civic-minded executives, private donations fund parks, arts, and sports Mingle with the natives: Hoist a local beer at Mr. Toad's, in the heart of the Old Market area Sunny days per year: 220 Best daytime lark: Seniors pay $12.50 at the world-class Henry Doorly Zoo; don't miss walking the rope bridge in the Rain Forest exhibit Median home price: $123,500 Local flavor: Wheatfields' baked goods rock; so does its senior menu, where a Grandmere Scramble or a Dusseldorf casserole goes for $8.50 Impress friends and family with: The area's numerous start-up companies, earning it the "Silicon Prairie" nickname
Vibe: Contemporary arts meet Western charm Secret affordability sauce: Two-thirds of the county land is public, making recreation a bargain; a recent 20 percent drop in housing prices Mingle with the natives at: The Rockslide Brewery downtown Sunny days per year: 260 Best daytime lark: Wander among the extensive (and quirky) outdoor sculptures Median home price: $159,800 Local flavor: Local vineyards get plenty of press, but make sure you snack on the region's impressive strawberries, sweet cherries, and peaches. (An outlying town is even named Fruita.) Impress friends and family with: The views of the Grand Valley
Vibe: Green not grimy, the city's 88 distinct neighborhoods create a European atmosphere Secret affordability sauce: Stable, diverse economy--since 2008, only Austin and Houston have added jobs faster Mingle with the natives at: Frick Park, in the city. In the summer, check out the Bowling Green (lessons are free for beginners) and in the winter, sled down the hill near Beechwood Boulevard Sunny days per year: 161 Best daytime lark: PNC Park, home of the Pirates, ranked as the No. 1 baseball field in the country by ESPN. Bleacher seats from $14 Median home price: $106,500 Local flavor: Eggs and kielbasa for breakfast at DeLuca's in the Strip district Impress your friends and family with: The view as you emerge from the Fort Pitt Tunnel. The New York Times once pronounced Pittsburgh "the only city with an entrance."
Vibe: Funky hippie meets world traveler. Secret affordability sauce: The country's sixth largest college--The University of Florida--fuels an economy more durable than most Southern cities. Mingle with the natives at: The Swamp, aka UF's Ben Hill Griffin Stadium. Tim Tebow isn't the only person to get fit running up and down the stairs here. Walk or run all you want--for free. Sunny days per year: 242 Best daytime lark: At the Florida Museum of Natural History, seniors pay $9 to watch butterflies released into the Butterfly Rain Forest Exhibit Median home price: $125,500 Local flavor: A Cuban sandwich ($8.95) at Emiliano's Café, a pioneer in the pan-Latin food movement. Impress friends and family with: The dense urban canopy, where Northern hardwoods meet Southern tropics.
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