I am a big proponent of being future oriented.  It is unclear how much this can be taught versus how much is in your DNA.  But there is no question that it is something that can be taught to a certain degree.  Kids that grow up in an upper class or upper middle class household are more likely to be future oriented, particularly if the parents did not spoil them too much.

In fact, future orientation is really what determines your class.  It isn’t so much how much money you make or how much wealth you have accumulated; it is a matter of your outlook for the future.  This is why some lottery winners end up losing it all and end up being poor again.  These people were never in the upper class because their mentality stayed in the lower class.

I also really like the concept of compounding interest.  It is a great concept to teach to your kids, which really goes hand-in-hand with future orientation.  You shouldn’t just live for today.  You should plan for tomorrow.

With all of that said, I think some people get carried away with looking too far into the future at the expense of today.  Sure, in order to save money, we have to defer gratification to a certain degree.  But it also doesn’t mean you should be miserable.

In the present day, I say that, at least for Americans, we have never had it so good in some respects, yet life is actually harder than previous generations in other respects.  Communication and technology are far better than ever before.  But some basic living expenses such as medical care are more expensive than they were a couple of generations ago.

Middle class America is struggling to a large degree.  This is a reflection of taxation and regulation.  When the government at all levels consumes about 40% of our production, it makes it hard to get ahead.  Then they also pile on regulations, which makes our lives even costlier.  This is especially evident (or should be) in medical care and insurance for medical care.

I find that there is more anxiety today than there was in the past.  Maybe it is an illusion, but it is my perception.  I also see the statistics about the number of Americans on anti-depressants.  I don’t know if this is because doctors are just pushing drugs, or if it is because Americans are more depressed than ever before.  I suspect it is a combination of these two things.

We see statistics about how little wealth the average American has.  Perhaps more accurately stated, we see how little the median American has.  The rich people bring up and distort the average.

We hear various statistics such as: 57% of Americans have less than $1,000 in their savings account.  These statistics have to be taken with a grain of salt to a certain extent.  There are some people with considerable wealth who don’t have a traditional savings account.  They may have their wealth tied up in other things and figure they can always use their credit card if they need some extra money in a pinch.

I do believe that lack of money is a major stressor in people’s lives.  We hear the saying that money won’t buy you happiness.  This is true.  But a lack of money can cause you misery.

Americans are frequently told that the way to obtain wealth and eventually retire is to buy a house and contribute to a retirement plan, such as a 401k.  While this isn’t always bad advice, it can also steer people the wrong way, and it often makes people unnecessarily miserable.

Think about someone who has virtually all of their net worth tied up in housing and a 401k plan.  If you are still working for the employer that holds the 401k plan, then it is basically illiquid.  And your house is basically illiquid too, unless you plan to move.  But even there, most people just move into another house and use the equity from the last house to buy the new house.

While it may seem good for the future to have a couple of hundred thousand dollars in net worth on paper, it is important to ask yourself, “At what price?”

For many, the price is not having any liquid money in a checking or savings account.  Therefore, every little or not-so-little expense in life becomes a major stress point.

Now, it is true that some people are just bad with money.  They could rent an apartment and not contribute to a retirement account and they would still end up with no money after each year.  For these people, they probably are better off putting money into a house and a retirement plan rather than buying more junk that they don’t need.

However, there are many people disciplined enough that they could pay less for a mortgage (or rent) and contribute less to a retirement account (or none at all) and save some liquid money.

There is something to be said to have $25,000 just sitting in a checking account.  You can pick your own number.  Take your monthly living expenses and multiply it by at least four, if not six.  You should strive to have liquid funds in this amount.  If you spend $4,000 per month on average, try to get $24,000 in the bank.

Many people call this an emergency fund.  But really, it is just an anti-anxiety fund.  If your car needs a repair, then you don’t have to lose sleep over it.  If you need a new appliance in your home, then it becomes less of a big deal.

The key here is stress reduction.  It is great that you are planning for your retirement in 30 years, or whatever it may be for you.  But it shouldn’t be at the expense of your health.  You shouldn’t add significant stress to your life.

Even if you are retired and tight on money, is this stress weighing on you?  For me, I would rather go out and work part-time, even if it is just for a year, in order to build up a cushion.  I would rather be working than sitting at home and “relaxing” while stressing constantly about money.  If you are in this position, you can always find something relatively fun to do.

While I will continue to preach about saving and future orientation, I think more people should also work on stress reduction.  And one way to reduce stress for a lot of people is to have money that is freely available for when it is needed.

Your health should really be your number one investment, and stress reduction is a major part of maintaining good health.  You will always have little stresses in your life that are unavoidable.  But if you have a significant sum of money in the bank, it will help reduce your stress in a lot of situations.