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Silver lining

Use the souring economy to take stock of your own money habits -- and emotions

May 13, 2008
By Ashley Gurbal,
The worst of economic times may be the best time to take control of your personal finances.

With rising prices, the country’s credit crunch and mortgage crises making headlines every day, some feel helpless, but they shouldn’t, said Dr. Steve Cartun, a psychologist with Altoona Regional Health System. Cartun has an interest in behavioral finance, a field that studies money and psychology.

“Things will improve, and people forget that,” Cartun said. “They must be willing to look at what they did to get this way, so the next time this rolls around — and it will — they’ll be able to survive.”

Start today

Slumping economy or not, “any time is a good time” to become financially literate, said Dave Miller, a senior financial adviser with Miller & Associates, a branch of Ameriprise Financial Services Inc. in Altoona. But it’s a discussion people tend to delay.

“So many people are afraid of finance,” Cartun said. “It’s so emotionally charged, and instead of talking about it, they tend to put it off.”

The generation in the workplace today has been influenced by their predecessors, Miller said.

“They grew up in an environment in which the previous generation never talked to them about finances,” he said. “It was something very close to their vest, and there were a lot of even spouses not talking about it. The man generally took care of money, and the woman took care of the house. That sounds sexist, but that was that generation.”

Many of today’s workers don’t stay with one company for their entire career, and changing jobs often can make it difficult to start planning for any financial goal, Miller said. Some are biding their time until an inheritance comes their way.

“If you look at the psychology of the current generation, there’s expectation of how much wealth there is in the previous generation,” Miller said. “So you talk to a lot of people who are procrastinating, looking and believing, ‘When mom and dad die, I’m going to get all of this.’”

The sooner someone starts saving, the easier it will be, Miller said.

“It breaks things down into smaller pieces,” he said. “I may sit down with a young couple in their 30s, and they might only have to save $100 a month, but if you start when you’re 40 or 50 ... the amount you have to save on a regular basis goes up significantly.”

Whatever the goal, it’s important that spouses start an open dialogue about their dreams and goals. Ameriprise Financial offers clients a ‘‘Dream Book,’’ which walks clients through listing their priorities, from health care to vacations to what they plan to leave as an inheritance.

The book starts a conversation, Miller said, which most wouldn’t have otherwise.

‘‘A plan isn’t a plan unless it’s written,’’ Miller said. ‘‘If it’s not written down, most times it will not be accomplished. ... Say you have a couple that’s got a couple of children, and when you sit down and talk with them, they’re setting aside money for retirement but not college education. Which one’s going to come first?’’

If you don’t know an APR from an IRA, is a financial education Web site that breaks down the basics of money and planning. The Pennsylvania Office of Financial Educa-tion, part of the state Department of Banking, launched the site in 2004.

‘‘No matter where you end up, or whatever you do, you need to be able to manage money,’’ said Dan Egan, spokesman for the Department of Banking. ‘‘You need to be able to pay rent, keep lights on, put food on the table, and hopefully save. You really have a plan, and you need to have an idea of what you’re doing.’’

Breaking bad habits

Comparing your possessions to your neighbor’s lays the groundwork for personal and financial failure, Cartun said.

‘‘Ignore what other people have,’’ Cartun said. ‘‘Visit neighborhoods with low incomes, read about Third World countries and use that as your frame of reference. Don’t look at your neighbor’s brand-new car ... and if you do, know that you might be looking at a risk-taker.’’

An increase in income won’t equal a decrease in stress if you don’t learn how to manage your money, Cartun said, if you adapt the same bad habits to the new income. Whether you make minimum wage or six figures, a monthly budget can show how discretionary income is being spent.

‘‘It’s a very simple thing, if you have $1, you can only spend it on one thing,’’ Miller said. ‘‘What they do is spend that same dollar on two or three things, and that’s where you get into credit cards, borrowing and sometimes buying when you can’t afford it.’’

Put money in its place

When budgeting, there’s one person you shouldn’t forget to pay — yourself.

‘‘When you sit down each month, you pay the gas bill, mortgage, insurance — that’s a given,’’ Miller said. ‘‘You are more important than all of those single items. The very first thing you want to do is set something aside for your savings.”

Many feel attached to their financial status because money is like ‘‘life’s report card,’’ Cartun said.

‘‘We feel it’s a statement of who we are,’’ he said. ‘‘Money is supposed to provide for oneself and their loved ones and hopefully make for a comfortable retirement, and it’s not about anything else.’’

Mirror Staff Writer Ashley Gurbal is at 946-7435.

Article Photos

Courtesy photo
Dr. Steve Cartun, a behavioral psychologist with Altoona Regional Health System, says emotions can impact the way finances are handled.

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