Good News, Bad Habits

Feb 14, 2018 by

Southward view from our home.

In addition to staring out our living room window at the Vancouver Island view we’re lucky to be able to enjoy, another of my hobbies is nutrition. I adopted a modified vegan diet in August 2012, and I enjoy learning about (and experiencing!) its health effects. This line of study has made me aware of “the diet wars,” and wow the polarization around competing diets is nearly as nasty as around U.S. politics. I stay out of the battle—some apparently feel compelled to evangelize about diet (and some of these are motivated by financial gain—they make their living promoting a certain diet), but I’m not conceited enough to suggest to anyone else what would be best for them to eat. My interest in nutrition is purely selfish: I’d like to eat in a way that, for me, will lead primarily to the highest quality, and secondarily to the longest, life I might be fortunate enough to enjoy.

Good News, Bad Habits

One of the barbs favored among the gurus of the sort of diet I eat is this: people love to hear good news about their bad habits. This mantra is resurrected when, for example, Time magazine proclaims that “butter is back” on its cover or a food blogger repeats the incorrect refrains that humans must eat meat to get complete, adequate protein or that we must eat dairy products to meet our calcium requirements.

The diet wars aside, I think it’s true that we often do embrace good news about our bad habits. “At last, I can stop feeling guilty or persecuted” (we feel with relief and joy)! And the good news / bad habits mantra applies in many areas of our lives, not the least of which is personal finance.

“Good News” About Bad Money Habits That You’d be Better Off Ignoring

I’ve studied on the question and come up with six pieces of “good news” I’ve come across during my interweb wanderings about what’s traditionally considered a bad financial habit. Trouble is, for these six examples, the old, “bad” news is mostly correct and the “good news” best ignored! Embrace the good news, and more than likely progress toward your money goals, whether Financial Independence, Retire Early or anything else, will take a hit.

1. You Don’t Need a Budget

Strictly speaking, this “good news” is correct: almost no one needs a budget. Only those people who want to most easily meet and exceed their money goals need a budget. 🙂

2. You Don’t Need to Track Expenses

I could ditto my comment under budget above, but I’ll expand a bit: It’s a truism that’s actually true that you can’t manage well what you don’t measure. Try this test: Diligently track your expenses for just 6 months. If you’re not shocked, surprised, and enlightened by some of the results (“we could fund an IRA for what we spend on alcohol!!”), I’ll publish on Money Counselor an image of myself naked. Okay, maybe that prospect won’t inspire anyone. 🙂 How about I’ll publish the details of our net worth, like every other money blogger seems to do about themselves to please their evidently voyeuristic audience!

Budgeting and tracking expenses go together: the budget is your financial plan, and tracking expenses is a crucial part of judging how well you’re on plan.

One more comment on budgets and tracking: If you’re one of the fortunate few whose opportunity to earn income overwhelms the potential value of every other personal finance factor, then by all means, turn that income crank, madly! I don’t want you to spend time entering your expenses into personal finance software when you could instead be earning big bucks devoting that same time to generating income. That said, I’d bet you a dollar even Warren Buffet has a budget.

3. Payday Loans Are Okay for the “Unbanked”

No one is so desperate and so out of options that taking out a 600% APR loan is their best option for meeting a short-term financial need. No one, period, ever, end of story.

4. Go Ahead and Charge It; You’re Building a Great Credit Rating

Putting all of your expenses on a credit card and then paying it off in full every month may feel like a great strategy to optimize your credit rating. But it’s not. Have a look at this excerpt from my Simple Guide, Raise Your Credit Score the Right Way to learn a bit more.

5. Live Now, Save / Plan Later!

On a planet seemingly headed for cataclysm of several sorts during their lifetimes, I can appreciate that young people are inclined to put off saving in favor of enjoying life today, while they’re ablest, sea water hasn’t yet inundated Manhattan, and Hawai’i hasn’t yet experienced a genuine incoming ballistic missile warning. The failing of this strategy is a matter of simple arithmetic. Read Benefit of Saving $5,500 to see what I mean.

6. Emergency Funds are for Losers

Nearly everyone who has suddenly and unexpectedly gotten into a serious financial challenge, and many of those who have been obliged to file for bankruptcy, believed this “good news” about emergency funds. I would ask this: has a right-sized emergency fund seriously harmed anyone, ever?

And by the way, regarding butter, please read this: Butter is Back?

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