I recently heard someone say “Well, you know money talks and BS walks.” I know a lot about BS—I have a well-developed BS detector that activates quickly to keep me from stepping in it. I was intrigued by the idea of “money talks,” though.
I think money does talk—are you listening to it? In the real world, money isn’t just paper and coins—it’s bank accounts, credit cards, retirement funds to name a few. I thought about money and what it says in my own life. I discovered that Money has a very limited vocabulary. “Hello” and “Goodbye” with an occasional “See You Later” pretty much covers it all!
Money says hello as income—from every source, salary, dividends, gifts and even the lottery. It’s easy to tell when Money is saying “Hello.” The other side of Money Talk is “Goodbye.” Maybe you aren’t even aware of the seemingly limitless ways money says “Goodbye.” You probably say Goodbye to a considerable part of your income for normal bills like rent or mortgage payment, food, car, medical, childcare, taxes etc. An exception Goodbye is your retirement plan—you are not really saying Goodbye, it’s more like “See You Later.”
Now about those other stealth Goodbyes. Check your credit card statement. Down at the bottom, or somewhere on the page is Money, saying “Goodbye.” The box that says how much interest you paid to buy things is right there, waving at you. The higher your balance and the higher your interest rate is, Money is waving a BIG Goodbye. You may pay $100.00 on your bill, but not all of it goes to pay off the balance. Take a look at the truth-in-lending part of your bill—it will tell you how much it will cost you over time.
Another way Money says a quiet and well-hidden Goodbye is bank charges. Check out your bank statement. Some banks actually charge you to have a paper statement mailed to your home. If they do, maybe it’s time to switch to on-line only. Look for other charges you aren’t sure of and give the bank a call to clear things up. It’s important for you to look at your accounts frequently—more than once a month. It’s one of the best ways to find out if there are charges to your account that you did not authorize. It may be that you might be looking for a new bank or credit union, one that doesn’t have extra charges.
Retirement funds (IRA, 401K, etc) have a lot of Hellos and Goodbyes. It’s the nature of the market—Bull-Bear, Up-Down. Hello to fund growth and reinvested dividends. There is one hidden Goodbye you can look at, and that is how much you are being charged to have the funds in your account. Contact your financial advisor and find out if the funds you hold charge more or less than the industry average. The fee can be pretty invisible, but it’s there all the same.
Speaking of retirement funds (except Roth IRAs) the Really Big Goodbye is when you cash out too early. There are some exceptions, but for the most part, you will not only get penalized for the early withdrawal—you will have to pay taxes on it too.
There are lots of other ways Money says Goodbye. Check out your own life and see where your Hellos and Goodbyes are. It’s way better to see Money walking toward you waving Hello than walking away from you waving Goodbye.
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