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Jonathan Clements, a columnist for the Wall Street Journal, is leaving journalism. He published his last article on Wednesday, a reflection on fourteen years at the Journal and 26 years writing professionally about money.

In the article, he looks at the essence of saving and investing. Why bother? A number of visitors touched on these points on yesterday’s post on Consumerism Commentary about frugality and compromises. Here’s what Jonathan Clements has to offer for his final word to readers.

If you have money, you don’t have to worry about it. You don’t have to worry about it, but many people do. Growing your money requires paying attention to your finances, and when you’re aware of problems, you’re more likely to worry about it. But if you’re earning enough from your pay check or investments to cover your expenses, save, and invest for the future, then you have the flexibility to turn your attention to other things.

Money can give you the freedom to pursue your passions. This is what inspires me to continue being vigilant about my own finances. There have always been a number of things I’ve passionate about, including music, technology, building communities, and inspiring other people whenever possible. For a long time I was able to combine these passions, but the real world was calling and I needed to stop going deeper into debt. Once I’m financially independent, no longer needing to trade my time to earn a living, I can pursue these activities further.

Money can buy you time with friends and family. For most people, this probably falls under the “passions” category. Jonathan writes about the ability to spend when socializing with people who make you happy, but even those who are struggling financially can find happiness through making time for those who are important. It doesn’t take expensive dinners and traveling to find happiness.

Clements ends his final article with a reminder that a rich life isn’t always about the money.

I’ve cited Jonathan Clements‘ articles a number of times on Consumerism Commentary, and I’ve almost always agreed with his points of view. Thanks for the excellent articles over the years.


I’m disappointed that the NBC television show Journeyman has been canceled. Last night’s final episode seemed like the writers rushed to close the storyline. I’m probably just a sci-fi geek, but despite a first-impression resemblance to NBC’s Quantum Leap (and more resemblance to classic science fiction literature), I found the show to be quite unique and enjoyable. It’s another clever show that got lost in the network’s ratings chase.

On AllFinancialMatters, JLP echoes Jonathan Clements’ 12 suggestions for making your kids financially savvy. I particularly like the first point: children should learn the ability to delay gratification. Not only must the parents be able to say no, but the parents must exemplify this philosophy through modeling sound decisions.

Nickel writes about his thoughts on the new energy bill. I still see so much misunderstanding about this bill. The government is *not* banning incandescent bulbs, for instance. It does raise the interesting issue of how much government should be involved with regulation. See the article and commentary on Compact Fluorescent to Become Mainstream.

A few days ago, I watched the classic It’s a Wonderful Life with James Stewart. (If there’s any ambiguity in that sentence, I apologize.) It’s an interesting movie, often imitated, with an interesting social and financial commentary. On Get Rich Slowly, J.D. hit the nail on the head with his analysis of the value of social capital.

Finally, Lynnae from Being Frugal has some suggestions for building an emergency fund when money is tight. Her suggestions are to “pay yourself first,” a camera-ready way of saying, “Automatically deduct a small portion of your paycheck before you even have a chance to see it,” and use your growing savings as encouragement to continue. It takes only a small amount of dedication and discipline to build an emergency fund, and it’s possible using these techniques in almost any situation.


Mental MistakeJonathan Clements from the Wall Street Journal decided to don his psychologist hat and evaluate the muddled minds of investors. He discovered four mindsets that hinder people from investing intelligently.

Let’s face it, amassing a decent-size nest egg isn’t exactly rocket science. All we have to do is save regularly, buy a few low-cost mutual funds and patiently await our reward. Yet most of us scorn such humble simplicity. Instead, we are too confident and too clever.

* People buy the investments they wish they bought at some other time. As the price as an investment rises, investors should “grow leery” of the value. Instead, people jump on the bandwagon for last year’s hot stock or commodity. If it works out in the short term, the investor feels like a genius and gains confidence to make more unsafe moves.

* People want to get even. If Jack’s identically-housed neighbor sold her dwelling last year for $1 million, Jack will have a hard time settling for $800,000. “[This is] about avoiding regret. If we sell for less than we paid or less than the neighbors got, we have to admit we made a mistake, with all the associated pangs of regret.”

* People shy away from their falling investments. In some cases, falling prices represent deteriorating “underlying fundamentals.” Clements uses the example of Treasury Inflation-Protected Securities (TIPS), and he believes the lower prices make them a better investment, with no damage to the fundamentals.

* People have no self-control. With the negative savings rate in the United States, we would rather spend now than put away our money and invest for the future. We convince ourselves that everything will be okay in the end. Jonathan Clements believes this may be our biggest mistake.

I can only speak for myself and say I believe I’ll be fine in the end. I’m working hard, saving money, making money in places I never thought I would be if you asked me a few years ago, finishing a master’s degree and contemplating my next steps in career and education, and always learning about investing. If I were to live like I was in 1999, spending more money on the commute alone than I was making, I would not be able to say the same.

Thanks to Jim Mahar for sharing the link.


Teaching Kids About Money

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Yahoo Finance is presenting a feature on teaching children about money. Here are some of the highlights.

When to Kick Your Kid Out of the House, and Other Financial Lessons for Parents. In a middle-class household, it will cost on average $184,000 to allow your one child to live to year 17. If you send her to college, obviously costs can vary, but Jonathan Clements, the author of this article, puts that price as an additional $160,000 for a prestigious private college. That’s today’s money — as we’ve seen, college costs outpace inflation.

On top of the pre-college and college costs, more offspring live with their parents for some time after college. This makes sense for the kids, but the parents may not be as thrilled. Clements offers these suggestions:

* Talk about your own struggles. Sit them down and tell them how hard it was for you after college, if that’s applicable.
* Draw up a plan. The returning child shouldn’t just be “hanging out to see what happens.”
* Treat your adult children like adults. Adults have responsibilities, not chores. No allowances — rent payments instead.
* If you help your kids financially, aim to leverage your investment. View the situation as a partnership, but don’t sacrifice your own financial well-being.

Another article in Yahoo’s feature speaks to “boomerang kids” — those who return home for a period of time. Jay MacDonald offers some tips resembling those above.

I lived with my father for a few months after college, but I should have probably used my money and time more effectively during that period. While I wasn’t paying rent for those months, I didn’t realize that my job at that time would not support me if I had real, adult expenses. When I moved out, I still didn’t know what I was doing. Eventually, I determined that my expenses must be lower than my income if I desired a future resembling something comfortable.