When it comes to securing financial security, are you a doer or a dreamer? By definition, financial doers have a better shot at reaching their retirement goals. No real surprise, they also have a much better shot at raising children who are good with money, according to a new survey.
TD Ameritrade separated financial doers from financial dreamers by identifying eight sound money practices. Doers engage in at least five of these behaviors; dreamers engage in just four or fewer. Where do you fit in? The behaviors:
- Act more like a saver than a spender
- Live within your means
- Automatically deposit money into savings each month
- Stick to a budget
- Track household expenses
- Pay off credit card debt in a timely way
- Regularly contribute to a 401(k)
- Have contributed to an IRA
In the survey, those who engaged in at least five of these practices – the doers – expressed far greater confidence in their financial future; 80% said they expect to reach their retirement goals vs. just 59% of dreamers with similar expectations. The starkest dividing line: 78% of doers identified themselves as savers vs. just 33% of dreamers who did the same.
Being responsible with money translates into other healthy habits. Financial doers get health checkups, exercise and eat better more often than dreamers, according to the survey. The wide-ranging salutary effects of systematically working toward financial goals – less stress and better relationships – have surfaced in scientific studies as well.
So, smart financial management isn’t just about making ends meet. It’s about living a healthy life, and getting your kids started down the same path. In the survey, 57% of doers reported that their parents had regular money talks with them while they were young; 77% said their parents helped them set financial goals. Perhaps more important, 74% of financial doers reported that their parents set a good example in such areas as saving and investing, and staying out of debt.
“Parents have a profound impact on their children in many ways, and financial matters are no different,” Lule Demmissie, managing director at TD Ameritrade, said in a statement. “Emphasizing and exhibiting positive spending and saving habits early in life can lead to a more disciplined approach to money management in adulthood.”