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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retirement due to its tax advantages, but it also comes in handy in an emergency because any deposits you make can be withdrawn without a penalty.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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Published on May 7, 2019

How to Invest for Retirement (The Smart and Stress-Free Way)

How to Invest for Retirement (The Smart and Stress-Free Way)

When it comes to stocks, I bet you feel like you have no idea what you’re doing.

Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.

Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?

You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.

Here’s how to invest for retirement the smart and stress-free way:

1. Know Clearly Why You Invest

Odds are you already know why should invest for retirement.

But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:

  • Will you spend more time with your family?
  • What does retirement mean to you?
  • Are you looking to launch that business you’ve been holding off for years?

Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.

Investing in the stock market allows you to take advantage of compound interest.[1] All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.

2. Figure out When to Invest

“The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb

It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.

The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.

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A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.

Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.[2]

3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio

Investing your money well depends on your emotions.

Why?

Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.

Before you invest your next dollar, know your risk tolerance.[3] Your risk tolerance determines the number of risky and safe investments you’d have.

Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.

Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.

4. Open a Reliable Retirement Account

Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.

If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.

You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:

  1. Vanguard
  2. TD Ameritrade
  3. Charles Schwab

5. Challenge Yourself to Invest Consistently

Committing to invest for retirement is hard, but continuing to do so is harder.

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Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.

That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.

Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.

A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.

6. Consider Where to Invest Your Money

The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:

Robo Advisors

Robo-advisors[4] are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.

Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.

Bonds

Think of bonds as “IOUs” to whomever you buy them from.

Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.

Here are the different types of bond categories:[5]

  1. Treasury bonds
  2. Government bonds
  3. Corporate bonds
  4. Foreign bonds
  5. Mortgage-backed bonds
  6. Municipal bonds

Mutual Funds

Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)

One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.

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Real Estate

Yes, buying a home is an investment when done correctly.

Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.

This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.

But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.

Savings Accounts

Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.

7. Master Disincline to Dodge Short Success

Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.[6]

So how can you master delayed gratification?

By building your discipline.

Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.

Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.

8. Aggressively Invest on This One Investment

I’ve mentioned several types of investments but haven’t covered the most important one.

It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.

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More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.

But, how can you invest yourself?

Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.

Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.

But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.

Retire Happy with Excess Money

The key to a secure financial future doesn’t only belong to financial experts.

It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?

I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.

Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.

One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?

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Featured photo credit: Matthew Bennett via unsplash.com

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