Whether you admit it or not, you love being in control. From personal relationships to personal finances, being in the driver’s seat is ideal. So, why don’t more people do it? Why are so many people being controlled by friends, family, or co-workers as well as their finances?
Taking Control – Finance Style
Let me suggest that the lack of financial control comes from much of what we watch, hear, and read.
To test this theory, I went out and did what any average American would do…. search Google! Ha-ha, I know it sounds lame but let’s be honest Google is the official go-to for any question. So, I searched “take control of your finances.”
Among the pages and pages of advice from various blogs and high-profile financial institutions the advice was all quite similar, and to be frank it was good advice. Here are a few of the most common suggestions as to how one can take control of their finances:
1. Create a budget – I could not agree more with this one. Incredibly important no matter how much money you make.
2. Eliminate debt – Another huge step to regaining financial control
3. Seek after lower interest rates – if you do plan on borrowing money make sure you don’t get caught owing insane amounts of interest. The average American will end up paying close to $600,000 in interest alone over their lifetime.
and last but definitely not least…
4. Save for retirement – this is the area that I think needs the most work. You might do a fairly good job of controlling our budget, debt and interest rates but all too often retirement and savings dollars are completely out of your control.
Do You Control Your Retirement?
Let me quickly focus on number 4. Where would you say most people house their retirement savings? The top three answers are 401k, IRA, and Roth IRA. Okay, now let’s dig deeper…. The obvious similarity between these 3 options is the fact that they are all government sponsored retirement plans.
In a nutshell this means that the government ultimately controls them. How?
1. they tell you when and how much of your money you can access
2. they tell you the maximum you can contribute in any given year.
3. they limit the investment options you have.
4. they penalize you if you don’t play by their rules.
Now based on these 4 points I would say that government sponsored plans severely limit your ability to control your retirement. I would argue that you are taking yourself out of control. You are investing your savings in a vehicle that is, in most cases, 100% susceptible to market risk and mostly out of your control.
Wrap Up
Alright, so let us wrap this up and review. We all like being in control, especially of our finances. Being in control of our budget, debt, interest rates, and retirement can mean a much less stressful financial course throughout life.
Make sure you are comfortable with the amount of control you have…. after all you DO have a say! If you are the type of person that needs to lock away your retirement money to keep from spending it, then do it. If you would rather be in control of every aspect of your financial life (like me) then get going and find the vehicles that allow you to do so.
So, what kind of person are you? Is it best for you to watch from the sidelines while someone else makes sure things run smoothly, or do you need to feel that control?