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Ten tips

Financial sins can sabotage goals

By HELEN HUNTLEY
Published March 6, 2005

Jean Chatzky, Money magazine columnist and Today Show regular, says you don't have to be a millionaire to be happy, but there is a connection between money and happiness. She focuses on the financial traits that lead to happiness in her book, The Ten Commandments of Financial Happiness: Feel Richer With What You've Got. Here are her commandments:

1. THOU SHALT GET "PRETTY WELL ORGANIZED.' If you know where to find things when you need them, you'll be more efficient - and less frustrated.

2. THOU SHALT PAY BILLS AS THEY COME IN RATHER THAN ALL AT ONCE. The pay-as-you-go system makes bill paying less of a chore and less emotionally draining. It helps if you keep bill-paying equipment such as stamps, pens and your checkbook in one spot.

3. THOU SHALT KEEP TABS ON YOUR CASH. Develop a system to help you keep track of where your money is going. Two potential options: Save your receipts or route all transactions through your checking account.

4. THOU SHALT SAVE AT LEAST 5 PERCENT OF YOUR HOUSEHOLD INCOME. It's best to do it automatically, through payroll deductions into your 401(k) or through automatic transfers from your checking account to an investment account. Once you're in the habit of saving 5 percent, gradually ramp up your contributions to higher levels.

5. THOU SHALT PROTECT YOUR FAMILY (AND YOURSELF). Cover the basics with an emergency fund, life insurance and a will. Then you won't have to worry so much about plane crashes and other disasters that might befall your family. Disability insurance also is valuable, especially for singles.

6. THOU SHALT MINIMIZE CREDIT CARD DEBT. Home mortgages and car loans don't stress us out the way credit card debt does. If you can stop rolling over a balance, chances are good you'll be happier.

7. THOU SHALT DO UNTO OTHERS. "Giving money to the causes you believe in has the strongest tie to personal happiness," Chatzky says. She says volunteer work and other donations also will boost your happiness quotient.

8. THOU SHALT SPEND SENSIBLY. Figure out what's sabotaging your savings plans, whether its spending too much on big things such as cars or little ones such as lattes and cell phone service. Take a hard look at the annual cost of your indulgences and figure out which ones you can do without.

9. THOU SHALT START WORKING TOWARD YOUR GOALS. Set financial goals for yourself and pay attention to your progress. "You don't have to hit your marks to be happy, " Chatzky says. "Just making the effort to a point at which you start to notice results makes a tremendous difference."

10. THOU SHALT COMMUNICATE. Talk to your spouse or partner about big purchases before you make them. Communicating can help ward off fights.

Source: "The Ten Commandments of Financial Happiness: Feel Richer With What you've Got" by Jean Chatzky, Penguin Group, $14. Previously published as "You Don't Have to Be Rich."

[Last modified March 6, 2005, 00:21:48]