Think about all those romantic holiday movies you’ve seen. The characters, challenges, and goals differ in each, but they almost always end with a “happily ever after.” What if we viewed our financial journey through the same lens? Sure, we can skip the fake snow and cheesy moments, but at its core, each of us plays the lead role in our own story. We all face unique challenges and pursue different goals, yet we share a common desire for a positive outcome in the end.
Too often, we overcomplicate things, worrying about what others are doing or saying we should do. The truth is that there’s no single right path to financial success. There will always be “what-ifs” and “why nots,” but your journey should reflect your goals and circumstances.
Let’s look at three common pieces of financial advice that you may want to think twice about, depending on your personal financial goals.
Save as Much Money as Possible for Retirement
Yes, saving for retirement is crucial. However, that doesn’t mean you have to max out your 401(k) every year, deprive yourself of enjoyable experiences, or hoard cash under your mattress. Everyone’s financial journey is different.
For instance, if you’re in your mid-20s and planning to buy a home in a few years, maxing out your 401(k) might not be the best strategy. Instead, aim to get the full employer match and consider other investment vehicles that offer more liquidity, helping you reach your short-term goal.
The important thing is developing the habit of saving and increasing the amount as circumstances allow. But think strategically about where to allocate your savings.
Debt is Bad
Not all debt is created equal.
Bad debt—like credit card debt or a personal loan—often results from purchases that depreciate quickly or lose their value altogether, leaving you stuck with the payments. These might include luxury items, high-end cars, or impulse buys. That said, having a credit card is important for building credit history, which can help you secure loans. Make sure you are in control of your spending and create a habit of paying off the balance on your credit card each month.
Good debt, on the other hand, can be a valuable tool. Mortgages, student loans, and small business loans allow you to invest in yourself and potentially grow your financial stability or quality of life. Good debt can open doors to opportunities that align with your goals.
Pay Off Debt as Quickly as Possible
It’s generally wise to avoid carrying high-interest credit card debt, as it can quickly spiral out of control. But not all debt needs to be urgently paid off.
For example, if you have a fixed-rate mortgage with a low interest rate—say 3%—and you could potentially earn a 7% return by investing in a moderate-risk portfolio, you might consider letting the loan run its course. By doing so, you may effectively earn a 4% return on your money. Ultimately, it comes down to your comfort level and financial priorities.
All in all, everyone’s financial story is unique. There’s no one-size-fits-all approach to working toward your definition of success. Focus on your goals, assess your options carefully, and craft a financial strategy that works for you. (Fake snow optional.)
We want to assist you in reaching your happily ever after. Give us a call today or click below to schedule a 15-minute complimentary consultation.
