There are some four-letter words that cause parents and financial advisors to cringe. Unfortunately, you may have been exposed to these words and had to cover your ears so you did not have to hear the profane language.
At the risk of damaging your sensitive ears or eyes, I will share with you some sentences and/or scenarios where those words might be used and how you can combat them with positive four-letter words.
Picture this: A young couple just moved into a brand new home in your neighborhood that seems to put all of the other homes to shame. Not only that, but there is a new boat parked behind a new truck on the RV pad. You wonder how in the world these young people can afford to live like this. This four-letter word is called “debt” and often goes along with “shop.” The truth is that many of these people can’t afford to live like that for long.
Many in the young generation believe they can have everything now and they don’t have to work for years to accumulate wealth like their parents did. Unfortunately, there are many established adults that have fallen into the same debt trap. As they near retirement, they still have a large mortgage, car payments, and worst of all, credit card debt.
To combat this, we need to introduce two positive four-letter words, “work” and “save.” Many young people believe that “work” is a bad four-letter word, but they are wrong. As Colin Powell said, “A dream doesn’t become reality through magic; it takes sweat, determination, and hard work.”1 Both young and established can learn to “save” rather than spend. It isn’t always easy to set money aside, especially when others around you may seem to have so much. Just remember that you should “live like no one else, so later you can live like no one else.”2
A four-letter word often muttered in frustration by parents is “kids!” This word often makes financial planners frustrated as well, especially when parents put their own retirement at risk in order to help “kids” out.
In the early years, parents may fail to put contributions into their retirement plans because they are taking care of their “kids.” In later years, parents may take out too much money from their savings to help their “kids” out.
To save parents from their kids, the parents must create a “plan” and learn to stick to it. In the early years, stay dedicated to saving your money in your “401k” or “Roth” IRA. Use the opportunity to teach your kids about saving and planning.
In the later years, learn to “give” responsibly. Allowing your kids to struggle can be highly beneficial. You don’t need to help them out of every tight jam or it might teach them learned helplessness.3
One big four-letter word that people seem to ignore during good times is “risk.” Most people want to get a good return, but “only when the tide goes out do you discover who’s been swimming naked.”4 We have seen too many people get caught by a “scam” and “lose” their shirt because they ignored the warning signs.
Be sure to take a balanced approach with your investments based on a solid “plan.” Some of your investments can be on the riskier side, but you should always have some money with less “risk.”
Now, wash your mouth out with soap and stop saying the bad four-letter words. To feel financially prepared, focus on the good four-letter words: work, save, 401k, Roth, give, and plan.