Over the last few years I have developed a series of hypothetical questions that I consistently ask myself. While this characteristic is congruent with someone that is on the verge of institutionalization, it is also responsible for my unique form of financial advice. If I am going to help my generation get a grasp on their money lives, then I need to recreate a process of financial discovery. I strongly believe that we, as a financial community, need to hit the reset button. We have been advising every single generation, for the last several decades, the exact same way.

But here is the (not so) harsh reality. Retirement and financial independence will he completely different for us than it is for our predecessors. The main culprit in this forced change is our: health. We are going to live a helluva lot longer than our parents. It is unrealistic to believe that we can work half our lives, only to not work the other half. I don’t want to be the one to break this to you (it should be someone like Oprah or Ryan Seacrest), but you are going to live to 100. You might as well photoshop wrinkles on your senior picture just to get used to it. You need to start switching your financial thinking to adjust to your newly discovered longevity.

Ah, yes…I had a point, and here it is. Why not put yourself on the road to retirement right now? This topic is immense enough to write a book, alas I’m going to condense it down to a couple of paragraphs. Our “retirement” is going to consist of doing a job that you are comfortable doing until the day you die. It’s all about redefining your passions, skills, and work ethic. You don’t want to work that 60 hour per week middle management job? Cool with me, just find something else that you want to do. The limiting factor, of course, is your income needs. Your career decisions have, and always will be dependent on your income needs. Unless you decide to eliminate that factor. 

I swear to you, dear friend, that I have a point, and it’s right around the corner. Stick with me. How much money would you need to make for you to walk away from your job and do something that you enjoy for the rest of your life? There are a number of factors that figure into your ability to answer this question:

1. Is your current job the final solution? It’s quite possible that your current job is a job that you’re passionate about. It is a job that you can continue to work some way, shape, or form into retirement. This would be great, and you are well on your way to understanding how our “retirement” will be different.

2. You should accept less. Do you want to know how you know whether you have answered the income question correctly? You should be willing and able to accept less money to do a job that you truly enjoy. Why? Because, as will be true when you retire, you will finally put your needs and wants into perspective once you have chosen your final career. In order to live the retirement lifestyle that we will be faced with, you will have to live on less money.

3. You should regularly ask yourself the “how much to quit” question, and the dollar amount should consistently decrease. Look, I already know that I’m asking a lot of you. I’m asking you to accept less money in a time when everyone is looking for more money. And now I’m asking you to settle for less money every time that you ask yourself this question. I believe that you will finally have the right mindset to act on this hypothetical, once that your income needs start to decrease. You will have accepted this concept as reality, and you are closer to being prepared to live it. 

I consistently ask myself this major question. And I can honestly tell you that my income needs have consistently decreased. If you are currently in a career that doesn’t “do it for you”, then start asking the tough questions. The hardest part isn’t even decreasing your income needs. The real challenge is finding what you truly love, once you find that you will easily be able to decrease your income needs (or wants).

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in September.

Have you ever been in such a financial bind that you are forced to rack your brain for desperate solutions? If you haven’t, you will. I’m not trying to ruin your day, I’m just stating the important facts. No matter how much money that you have, you will someday (if you haven’t already) be forced to scramble. Millionaires are sent scrambling everyday to cover financial obligations. College kids all over the planet are sent scrambling every single day to make sure that they have enough money in their checking accounts to cover a late night “run for the border”.

How do your backup plans flow through your head? If you need more money than you have, how would you react? Would you go into debt? Would you get a second/third job? Or, would you call your family and friends? Many people choose the family and friends route because it is the least painful to the borrower. The other options (get another job, or go into debt) are less than ideal for the person in trouble, but “borrowing” from a family member or friend creates financial shrapnel. 

Everyone has money problems. Everyone. Your parents do, their parents do, and their parents….are dead. See, so you either have money problems or you are dead. But, I digress. Your parents (should) have more money than you, but they have bigger financial problems that, many times, they have never taken the time to understand. You want numbers?

Let’s say that you are 25, and your parents are 50. Your parents have a household income of $120k per year, and your income is $45k per year. Your parents have $357k to their name, and you have $1k to yours. They are in a much better financial position than you, but they have to be because they have some major stuff coming up: retirement, healthcare, and prescription costs. I’m just being real. I see it everyday. You are welcome to tell me how your situation is different than this, but most likely it is some derivation of my example.

Let’s assume that you need to be “bailed out” of some weird financial situation. You need to pay off some debt fast. You need a down payment on a home because you are “wasting” money on rent. Etc. Over the last 10 years I have seen this scenario no less than 100 times. And invariably, the parents are in a lot less secure position than they think they are in. So while they certainly can afford to help their adult children now, it is actually a very bad long term financial decision. 

My point? I don’t have one. Have a good day…..kidding. My point is that the easiest decision for you is often to go to your family and friends for financial assistance, but it actually is the worst thing you can do.  Create your own solutions without creating problems for others. It will hurst worse at the time, but it will be the smartest thing that you ever do.

Today you are going to figure out if you suffer from financial numbness.

Habits are a funny thing. Whether they are good or bad they become second nature. You become numb to them, and they become part of who you are. As you know, that is why bad habits can be so dangerous. There is one financial habit that I think is incredibly dangerous, yet it often goes undetected. That habit: numb spending.

Numb spending occurs when you become completely oblivious to the inordinate amount of expenditures that you have. In other words, you live in front of a cash register.  The problem is that the more transactions that you have, the less discriminate you are in your spending. Smart people consider all of their purchases quite seriously. I’m not suggesting that you get into some sort of Lincoln/Doulgas debate with yourself over a pack of gum, but if you are looking for change, then grab the podium, Abe. How many times per week do you purchase something? Go through your bank and credit card statements and count your transactions for three previous months.

What is your average monthly transaction total? To get your weekly total just divide your monthly totals by 4.33. Controlling your transactions will be a significant part of your success. This is why cash can be a tricky way to pay. You never really know how many transactions that you have when you use cash. This doesn’t mean that you get to skip your cash usage when totaling your transactions. You are going to have to take some serious time thinking about your cash spending habits. If you don’t have any earthly clue how many transactions it takes to eat up your cash, then you already have your answer.

How do you stack up with the weekly transactions below?

20 or more transactions—You are way out of control. There is simply no reason to spend money three times per day. Seriously.

15-19 transactions— This is damn near unacceptable.  If you have this many transactions, then chances are that you often get to the end of a calendar year and wonder where all of your money went.

10-14 transactions—You seem to have a pretty good grasp on the importance of frugality and economic efficiency, but you have room for improvement.

5-9 transactions—This is pretty tough to do, but if you are serious about turning things around then I believe this is the right amount of transactions. This probably means: grocery store, gas for you, gas for your spouse, one dinner, two lunches.

1-4 transactions—You are either really broke, really boring, or awesome.

There is a misconception that if you reduce your number of financial transactions, then you will simply spend more per transaction. It won’t happen. A majority of the transactions that you will eliminate are completely unnecessary expenditures. You won’t miss them one bit.

Reducing transaction require forethought and effort. It means that you need to take lunch to work sometimes. It means that you can’t go out to eat on a whim. It means that you need to start solving problems with something other than a piece of plastic. If you have a transaction “issue”, then most likely you try to solve many daily “problems” by simply making a purchase.

Set your new transactions goal. Having between 5-9 transactions per week is ideal. Remember, if you are trying to change your life significantly in just short amount of time, then you must make some really tough decisions. 

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.”  Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land.  Green Candy™: Get in control before the debt hits the fan.   

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego.  Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy.  Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). You can see him weekly on Fox News and Fox Business, as well as, WISH-TV in Indianapolis. He blogs regularly at www.petetheplanner.com/blog.

I have a green thumb…wait…I think I have a green thumb. Actually, I’m not sure I know what that means. I like to work in my yard and on my landscaping. Does that mean that I have green thumb? Anyway, I learned something interesting this past weekend. 

What city in northern Ohio starts with a T, rhymes with burrito, and is the hometown of the new owner of my iPod? Well, it doesn’t matter what town it is. What matters is why someone there has my iPod. Allow me to paint the picture.

Do you remember 1999? I hope so. It wasn’t that long ago. Did you buy a bunch of supplies? Water, canned goods, flashlights, short wave radio. I didn’t, but still felt prepared for whatever the year 2000 had to offer. People were frightened by the Y2K bug. It is slightly laughable now, but it was scary then. Many people over-reacted, and vice versa many people under-reacted. But all parties were fine.

I bring this up because you are going to hear, read, and see a tremendous amount about our economy in the next couple of months. The NY Times this weekend all but put us smack dab in th middle of a recession. It is scary. I felt uneasy after having read the article. Your first reaction is one of evaluation. Should you do anything different? Should you move your investments? I know I talked about recession last week, but believe me. This is just the tip of the iceberg.

Here is my super simple recession survival guide.

1. A flashlight. (I don’t know why. It just seems like it should be on a survival list)
2. Make sure you have a three tiered savings and investment plan. Short term savings in a savings account or money market. Mid-term savings in balanced mutual funds (nothing risky). And finally your retirement savings in a properly allocated portfolio. You need all three. This is also the time that some people find out that their is a downside to aggressive investing. Yes, 38% returns have been nice, but there is a downside.
3. Don’t panic and sell. If retirement is close, or if you need your money for a house or something, then consider moving some to cash. People who are 6 or more years from retirement, just relax. The market will find its way back up.
4. This is a good time to work on controlled spending.
5. Don’t listed to the media. They are just trying to scare you. They just want you to watch their show. We have been through this before, and we will go through this again.
6. Freeze-dried ice cream.
7. Be weary of a do it yourself stock portfolio. This is not a time for amateur stock picking.

This post isn’t meant to scare you. It is simply meant to relax you. Don’t do anything drastic, and seek professional advice if you are unsure what to do. Remember there is no reason for 95% of you to freak out. The other 5% should have freaked out a long time ago because they were doing the wrong things anyway.

How much are you comfortable spending with out first consulting your significant other? Can you spend $100 without discussing the purchase? 500? 1000? Does your partner have the same number?

I think that my number is $100 with Mrs. Planner. It’s not that I feel that A) I need permission $100 is a lot of money or C) I can’t make money decisions on my own But I frankly can’t think of something I would need that costs more than $100 that I can’t take the time to discuss. I feel that the discussion helps hold me accountable to our financial goals.

Some of you may find that this could be the root of some deeper issues. I will not be held liable for possible progress.

Discuss.

****Gift purchases for the significant other don’t count.

I had a friend in college who use to make us stop at the ATM every time we would make a late night run to Taco Bell. He wanted to know what sort of menu delicacies he could afford. If he had $6 in his account, then he would usually get a Mexican Pizza and a Chalupa. If he only had $3, then he would get two Chicken Soft Tacos and a Meximelt. Although I appreciated his attention detail, I thought this was a rather ridiculous way to spend money. Little did I know that online banking would allow millions of other people to “run for the border” the same way.

Online banking is a technological innovation that the banking industry has brought to us. Our job is to harness it’s convenience, and better our financial lives. Unfortunately, we have leaned on online banking, and now it could be our downfall. Many people today simply log on to their bank accounts daily to check their balances. They then spend whatever is left in their account. This is not the way online banking is meant to be used. It is impossible to get ahead when using this technique because you always spend what is left. People log on and then decide if they can afford a good lunch or a cheap lunch. It is liking opening your fridge and eating whatever is inside.

Do you do this? Do you do anything like this? If so, STOP. And if all else fails, make a trip to the Pete the Planner World Headquarters. I will yell at you with a smile on my face, and then we will go grab some lunch. You’re buying, so make sure to check you balance.

Some things are certain. Some things aren’t certain. Certain: death, taxes, my hair loss. Not certain: my Nobel Prize Application, Dick Clark’s age, and bonuses. Bonuses? Yes, its that time of year again when many Americans turn their watchful eyes to their potential bonus payouts come year end. I have seen bonuses both greatly enhance and destroy peoples’ lives.

Employers are smart (my employees may not think so), they know that you will generally give more effort when they tie your compensation directly to your results. Smart employers pay bonuses quarterly. Employers are let off the hook if you don’t reach your goals, but oddly enough we don’t let ourselves off the hook. Most people count on their bonuses despite the fact that they aren’t guaranteed.

I have a client whose bonus doubles his base pay. He is forced to only depend on the base pay. If he were to depend on the whole thing he could be in real trouble. It would be catastrophic. He does it the right way. Most people do it the wrong way.

Check yourself. Make sure that you are not putting too much faith in an uncertain bonus.