When not to pinch pennies

Created date

April 27th, 2010

This recession has taught us all some good lessons about pinching pennies. But there is another side to the proverbial coin: You get what you pay for. Sometimes cutting corners can cost you in the long run especially when it comes to your financial security and emotional well-being during retirement.

When cutting back backfires

[caption id="attachment_11561" align="alignright" width="280" caption="Don t put off important expenses like dental work or car maintenance the results could be costly down the road. (File photo)"][/caption] Beverly Hills financial advisor Rick Valdez says insurance is the number one area where he advises his clients not to skimp. That includes long-term care insurance as well as home and auto coverage. Cutting back on those things could save you money in the near term, but you leave yourself open for big risk exposure, Valdez says. Another type of expenditure that s easy to ignore when money is tight is maintenance be it for your home, your car, or even your health. Skip a dentist appointment here, an oil change there, and before you know it you could end up with a big bill for a new engine (or worse yet, a root canal!). It may seem counterintuitive, but Valdez says professional financial advice is even more important during difficult economic times than during periods of prosperity. For retirees, now is not the time to save a few bucks by firing your accountant or financial planner. With the stock market showing some big gains in the last year, it makes it more important to reevaluate your asset allocation, Valdez says.

Live a little (within your means)

And, what about treating yourself to some of the luxury items or special experiences you ve always dreamed of? Living within your means will never go out of style, but if you ve been squirreling away cash at the expense of actually enjoying your retirement, it may be time to rethink your goals. [caption id="attachment_11562" align="alignright" width="280" caption="(File photo)"][/caption] Ernie Zelinski, author of How to Retire Happy, Wild, and Free (www.how-to-retire-happy.com) knows a thing or two about living life to the fullest. Zelinski, 60, has been semi-retired ever since he was fired from his job as an engineer when he was 30. Instead of slaving away in the rat race, Zelinski decided to live simply, follow his passions, and learn from people who had achieved significant wealth and success. We all may not end up best-selling authors who are paid for speaking engagements like Zelinski has, but we can all take a cue from how he treats himself without draining his savings. Case in point, Zelinski currently drives a 1995 Camry but has always dreamed of owning a Porsche Boxster. So he s set up a special account specifically to save for his dream car. Once he socks away enough cash, he ll make the indulgent purchase guilt (and debt) free. Zelinski recommends ING Direct, an online bank that allows you to set up several separate savings accounts. If you get into poverty consciousness, it actually carries into everything you do, Zelinski says. Maybe you can t have it all, but with a little planning (and a little imagination) Zelinski believes you can have the things you want the most. So, whether it s a Porsche, a trip to Japan, a sailboat, rare artwork, an antique sofa, or whatever else your heart desires, the point is you can and should indulge yourself once in a while.