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7 Financial Lessons We Can Take From Breaking Bad

7 Financial Lessons We Can Take From Breaking Bad

Breaking Bad can teach us all some valuable life lessons; there’s still hope for television, human’s are capable of extraordinary and despicable things, don’t start a meth lab. Here, Tim Lenke from Wise Bread has 7 financial tips we can learn from Breaking Bad:

The hit TV show “Breaking Bad” will leave a lasting legacy as one of the most intense and popular shows on television. Watching Walter White and associates descend deeper into meth madness week after week has been truly entertaining.

But it’s also been educational from a personal finance standpoint.

Suffice it to say, Walter White made a lot of questionable decisions. And while we’re probably never going to make a foray into making crystal meth, many of his choices can offer helpful lessons in money management for the average, law-abiding citizen. From preparing for disaster to investing your money and how to deal with unexpected wealth, there is much to learn from the craziness of Breaking Bad. Here are seven lessons to take away from the madness. [Caution: Spoilers Coming]

1. Practice Good Estate Planning

Walter White began cooking crystal meth because he got an unexpected cancer diagnosis. He wanted to pay off his medical bills and make sure his family was taken care of.

There are obviously better ways to plan for a bad event.

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Life insurance is something everyone with a family should have. Do you have enough coverage? Look into setting up an annuity or other vehicle that can result in consistent payments to your family if the worst should happen.

Another big piece of estate planning is your emergency fund. Do you have enough cash in the bank to get through a tough period? Many financial advisors suggest putting away at least six months of salary.

A Roth IRA is a great way to save for retirement due to its tax advantages, but it also comes in handy in an emergency because any deposits you make can be withdrawn without a penalty.

Take time to review your financial plan. Are you prepared to handle any bad news that comes your way?

2. Get Quality Health Insurance

Health insurance is a vital part of your financial plan, and it’s important to review your policy to ensure you’re properly covered.

Walter White lived in a pre-Obamacare world. That means his medical expenses may not have been capped. Under the new Affordable Care Act, his expenses would have been capped at $12,700 annually, even if he had the low-cost “Bronze Plan” purchased through one of the new health insurance exchanges. (He also would not have been turned down by insurers for any pre-existing conditions.)

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But even under Obamacare, it’s still important to find coverage that won’t leave you on the hook for thousands of dollars that you may not have budgeted for. If you get insurance through your employer, review it closely to ensure you’re properly covered. If you do purchase coverage through a health insurance exchange, take a look at the Gold or Platinum plans, which have higher premiums but more comprehensive coverage. Being underinsured can still lead to financial hardship.

If you do come down with a medical condition, your employer may offer a health spending account, which allows you to deposit money tax free to help pay medical bills. Keep in mind, too, that unreimbursed medical expenses are often tax-deductible.

3. Talk About Money With Your Spouse

Walter thought he was best off hiding the truth from his wife, Skyler, but he’d have been better off being honest with her from the start.

According to the National Endowment for Financial Education, 31% of American adults who combined assets with a spouse or partner say they have tried to conceal the truth about their finances. Nearly 60% of these adults say they hid cash from their partner or spouse. But that same report also pointed out that in most cases, spouses end up finding out the truth, anyway.

Once Skyler knew about Walt’s “business,” she was — surprisingly — able to help him. But their relationship was irreparably damaged. The lesson here is that hiding financial truths from your spouse can strain a relationship and cause you to make bad choices. A family’s finances are always better off when everyone is aware of the full picture.

4. Do Something With Your Money

Since most of Walter’s money was obtained illegally, he had trouble investing it through traditional means. That’s why he kept most of his cash under the floor, in storage units, and in barrels in the desert.

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But for the rest of us, it rarely makes sense to follow the “under the mattress” philosophy of saving. Most bank savings accounts and CDs will pay you interest and are FDIC-insured. There are also plenty of other safe investments, including bonds, that will protect your initial investment and offer a return. Even stocks are generally safe if you invest in index funds and don’t need your money for a decade or more.

5. Manage Your Risk, and Don’t Get Greedy

Walter White’s downfall may have come when he continued to cook crystal meth even when he had more money than he’d ever need. He let ego and pride get in the way of sensible thinking, and continued taking big risks when he didn’t have to.

It’s tempting to always go after the highest return on investments. But investments with the highest returns often have the highest level of risk.

The lesson here is that if you are ahead of the game in achieving your financial goals, consider taking a more conservative investment approach to protect what you have. This is especially true for folks who are approaching the age at which they plan to retire.

6. Don’t Buy Flashy Things, Especially for Your Kids

After Walter’s drug money started rolling in, he went and bought Walt Jr. an expensive sports car. This was, of course, a terrible idea for someone trying to keep a low profile.

Even if you come into a lot of money legally, there are better things to do than blow it on an expensive material item. (Especially a car, which declines in value the second you drive off the lot.)

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Even ultra-rich people should take time to teach their children about good financial habits. If you feel the need to get a car for a teenager, take them to the car lot and have them learn about how cars are marketed and priced. Let them help you negotiate the best price on a small, reliable, and fuel-efficient sedan. Once it’s bought, set up a plan for having them pay you back.

And set a good example — parents who spend money irresponsibly have kids who spend money irresponsibly.

7. Don’t Be Afraid to Ask for Help

When Walter needed to launder his drug money, he called Saul. When he needed some bad guys to disappear, he found Mike or some other henchmen. Without some help, there’s a good chance Walt and Jesse would have been caught or dead before Season 3.

It never hurts to consult with experts when you are in over your head. If you are confused by how to invest your money, find a good financial advisor. If you have home or auto repairs that you can’t handle yourself, hire a guy. It’s OK to get help.

Tim Lenke is a dad of two who enjoys investing, saving for big trips, and quality barbecue. Tim blogs at Wise Bread and MakingCentz.

7 Financial Lessons From Breaking Bad | Wise Bread

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Siobhan is a passionate writer sharing about motivation and happiness tips on Lifehack.

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Last Updated on August 20, 2019

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. And that’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways on how to set financial goals and then actually meet them with ease.

5 Steps to Set Financial Goals

Though setting financial goals might seem to be a daunting task but if one has the will and clarity of thought, it is rather easy. Try using these steps:

1. Be Clear About the Objectives

Any goal (let alone financial) without a clear objective is nothing more than a pipe dream. And this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore if you are saving today, then you should be crystal clear about what it is for. It could be anything like kid’s education, retirement, marriage, that dream vacation, fancy car etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives, however small they may be, that you foresee in the future and put a value to it.

2. Keep Them Realistic

It’s good to be an optimistic person but being a pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going out of the line will definitely hurt your chances of achieving them.

It’s important that you keep your goals realistic in nature for it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said – “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman”. And this quote sums up the best what inflation could do your financial goals.

Therefore account for inflation whenever you are putting a monetary value to a financial objective that is far away in the future.

For example, if one of your financial goal is your son’s college education, which is 15 years hence, then inflation would increase the monetary burden by more than 50% if inflation is mere 3%. So always account for inflation.

4. Short Term vs Long Term

Just like every calorie is not the same, the approach towards achieving every financial goal will not be the same. It is important to bifurcate goals in short term and long term.

As a rule of thumb, any financial goal, which is due in next 3 years should be termed as short term goal. Any longer duration goals are to be classified as long term goals. This bifurcation of goals into short term vs long term will help in choosing the right investment instrument to achieve them.

More on this later when we talk about how to achieve financial goals.

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5. To Each to His Own

The journey of setting financial goals is an individualistic affair i.e. your goals are your own goals and are determined by your want to achieve them. A lot of times we get on the bandwagon of goal setting only to realize later on that it was not meant for us.

It is important that your goals are actually your goals and not inspired by someone else. Take a hard look at this step at all the goals you’ve set for after this step, you will be on the way to achieve them.

By now, you would be ready with your financial goals, now it’s time to go all out and achieve them.

11 Ways to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a 2 step process –

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough; and invest those savings wisely so that they grow over a period of time to help you achieve goals. So let’s get down to ensuring healthy savings.

Ensuring Healthy Savings

Self realization is the best form of realisation and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your monthly expenses. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you would be surprised to see how small expenses add up to a sizeable amount.

Also categorize those expenses into different bucket so that you know which bucket is eating the most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pump up your savings rate.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classical mistake which almost everyone of us do. We pay ourselves last!

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world i.e. we should be taking out the planned saving amount first and then manage all the expenses from the rest.

The best way to actually implement is to put the savings on automatic mode i.e. money flowing automatically into different financial instruments (for example – mutual funds, retirement corpus etc) every month.

Taking the automatic route will make us lose control of our money and hence will compel us to manage in what’s left with us thereby increasing the savings rate.

3. Make a Plan and Vow to Stick with It

Budgeting is the best to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be made.

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Nowadays, several money management apps and wallets can help you do this automatically. It’s easy and who knows, you may just end up doing what people fail to do.

At first, you may not be able to stick to your plans completely but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Rise Again Even If You Fall

Let’s be realistic. It’s not like the world will come to an end if you made one mistake. This isn’t called leniency but discipline.

If you fail to meet your budget for a month, don’t give up the entire effort just like that. Instead, start again.

Remember that flexible plans are the most realistic plans. So go forward and try to follow your financial goals as planned but if for some reason, the plan gets out of hand for you, do not give up on it just yet. This has a lot to do with your psychology rather than any material commitment.

All you have to do is to stay on the road and vow to stay on it, no matter how much you fall down.

5. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make Savings a habit rather than a goal. While it might seem to be counter intuitive to many but there are some deft ways of doing it. For example:

Always eat out (if at all) during weekdays rather than weekends. Usually weekends are expensive. Make it a habit and you would in turn be saving a great deal.

If you are travelling buff, try to travel during off season. Your outlay will be much less.

If you go out for shopping, always look out for coupons and see where can you get the best deal.

So the key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice which will be harder to sustain over a period of time.

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6. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission. And it would be rather easy to lose the grip over your discipline.

Therefore in order to stay the course, it is advisable that you keep yourself surrounded with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

7. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

So if you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

Use this journal to write down all essential points such as your short term, mid term and long term goals, your current sources of income, your regular expenses which you are aware of and any committed expenses which are of recurring nature.

When you have a written commitment on paper, you are going to feel more energised to follow the plan and stick to it. Moreover, it is going to be a lot more easier for you to follow you and track your progress.

At this point, you should be ready with your financial goals and would be doing brilliantly with savings; now it’s time to talk about the big daddy – Investments.

Making Smart Investments

Savings by themselves don’t take anyone too far. However savings when invested wisely can do wonders and we are at that stage where we will talk about making smart investments.

8. Consult a Financial Advisor

Investments doesn’t come naturally to most of us therefore rather than dabbling with it ourselves, it is wise to consult a financial advisor.

Talk to him/her about your financial goals and savings and then seek advice for the best investment instruments to achieve your goals.

9. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about them.

Just like “no one is born a criminal”, no investment instrument is bad or good. It is the application of that instrument that makes all the difference.

Do you remember we talked about bifurcating financial goals in short term and long term?

It is here where that classification will help.

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So as a general rule, for all your short term financial goals, choose an investment instrument that has debt nature for example fixed deposits, debt mutual funds etc. The reason for going for debt instruments is that chances of capital loss is less as compared to equity instruments.

10. Compounding Is the Eighth Wonder

Einstein once remarked about compounding,

Compound Interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.

So make friends with this wonder kid. And sooner you become friends with it, quicker you will reach closer to your financial goals.

Start investing early so that time is on your side to help you bear the fruits of compounding.

11. Measure, Measure, Measure

All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments; taking stock of how our investments are doing.

If there is one single step where everything (so far) can go wrong, it is at this step – Measuring the Progress.

If we don’t measure the progress timely, then we would be shooting in the dark. We wouldn’t know if our saving rate is appropriate or not; whether financial advisor is doing a decent job; whether we are moving closer to our target or not.

Do measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

The Bottom Line

This completes the list of tips for you to set financial goals and actually achieve them with not so great difficulty.

As you can see, all it requires is discipline. But guess that’s the most difficult part!

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Featured photo credit: rawpixel via unsplash.com

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