top of page

Financial decisions that will make or break you

This article by fellow ACA Advisor Erin Baehr is an excellent recap of the Five Fundamentals of Financial Fitnessvia Financial decisions that will make or break you |

January 18, 2011

Spend it all or save some?

This is, of course, the most fundamental of all financial decisions, and the one that impacts your financial success the most.

According to Ken Robinson, financial planner and author of “Don’t Make a Budget,” rather than looking at your paycheck as “I get to spend it all,” the wise decision is to say, “Here’s my take home, how much am I going to keep so I don’t have to work for the rest of my life?”


1. Save at least 10 percent of your income.

2. Have sufficient liquidity.

3. Fully fund your retirement plans.

4. Have the right-sized house.

5. Pay off all credit cards and consumer debt.

— Alliance of Cambridge Advisors

Robinson, owner of Practical Financial Planning in Cleveland, Ohio, advised to try to save at least 10 percent of your income, but if that seems like an insurmountable goal right now, start small, even if it’s only $5 a paycheck, to get in the habit, and grow from there. That pile of money you need for retirement will not appear all by itself.

Robinson said that “when we invest, we invest two things: one is money and the other is time. The more you have of one, the less you need of the other.” The younger you start the less you will need to save, and the less risk you will need to take. “I never had anyone complain they had too much money saved up,” he said.

Young people especially would be wise to heed the story of Jane and John.

Jane saved $1,000 per year for five years, from ages 20 to 25, while John saved $1,000 a year for 25 years, from ages 40 to 65. If they each earned a 6 percent return, at age 65, their portfolios would be worth about the same amount, even though Jane only saved for 5 years and didn’t add anything to her account after age 25, while John saved for 20 years

Read the complete article here:

0 views0 comments

Recent Posts

See All


bottom of page