There are many situations in which we're encouraged to say "yes."
Many motivational speakers demand that we say "yes" to life. Whether it be going back to school, taking an educated risk, or meeting new people . . . "yes" is the answer they say we should adopt.
But you know what? "Yes" doesn't always work out so well. There are times when "no" is a more appropriate answer - especially when it comes to times when you need to improve your financial situation.
Today I'd like to share with you some financial situations in which you should definitely say "no!" But I won't leave you hanging there, I'll show you how to do it with grace and strength.
Are you ready to say "no?" Yes? Then let's proceed!
1. Never put your child's college education savings before your retirement savings.
When their little Junior is born, many well-meaning parents want to start an education savings account. You know what? I think that's a fantastic idea. But you should definitely say "no" to putting their education savings before investing for retirement.
If you've ever flown on an airplane, you've probably heard the advice that in case of an emergency you should put your oxygen mask on before helping your little ones. Why? If you pass out, and your children can't put their masks on, you're all out of luck.
It's the same way when it comes to saving for retirement. You should always save for retirement as the priority before you help your children with their college education. That doesn't mean that you can't do both at the same time, but it does mean that if you have to choose between the two options, you should definitely choose to fund your retirement accounts.
You might have to make this decision when your children are young. But what about when your children are nearing high school graduation and you haven't started saving for retirement yet? What if you're still living paycheck to paycheck? Your children will have to understand that your financial security should matter to them - parents without the funds to support themselves may find themselves elderly and depending on their children for financial help! That should never be the case.
"I frequently discuss this topic with clients who range from new parent millennials to Baby Boomers with young adult children," said Jude Wilson, founder and Chief Financial Strategist at Wilson Group Financial.
"I tell them, 'of course you can help fund your children's education, but you must prioritize your retirement funding above all others.' Your children can always apply for a scholarship, or at worse case a student loan, but there is no such thing as a retirement loan."
Explain to your children that you want the best for them - but your responsibility is first and foremost to your spouse and own financial stability. Explain that you want to be able to be there for them when times get difficult - college is a privilege, not a right. Make sure your children don't take advantage of you.
2. Never cosign on anything.
You know why banks want cosigners on student loans, personal loans, vehicle loans, and just about every other loan under the sun? It's because they don't trust that the borrower will be willing and/or able to pay them back.
Now, if a bank, with its years of experience and fully-trained financial professionals don't trust the borrower to pay back the loan, why should you? Because they're family?
Unfortunately, so many family members are asked to cosign on a loan only to soon discover that now they're the ones who have to pay back the loan. Yikes.
That's why I recommend that you say "no" whenever you are asked to cosign anything. Now, does that mean that you can't help out your family member who is in need? Of course not!
You still have some options. You could gift them the money if you have enough - just make sure that they are going to use the money as you intend for them to do so and don't waste it. Whenever you gift someone money because of a need they have in their life, it's good to make sure that they are taking appropriate steps to improve their financial situation. The last thing you want is an everlasting mooch on your hands. Make your gift contingent on certain expectations you have for them to better their lives and become self-sustaining.
Another option is to simply teach them how to fish instead of handing them the fish. While this might not help them out immediately, it will improve their self esteem and their long-term financial security.
Sit down with whoever came to you with their need and talk to them about the situation. Don't feel rushed to make a decision. Say "no" to cosigning but perhaps explain that you'd like to help in another way.
That family member was my mom. While she had enough money for a great retirement, she wanted me to cosign for her to be able to get in on the real estate boom that was - at that time - taking over Las Vegas. Her credit was bad and she needed help.
She wanted me to cosign, and I had to say "no." I had to do what I had to do.
Marcia Passos Duffy for Bankrate.com via BusinessInsider.com, agrees cosigning is a bad idea and says:
If your pal or a family member does come to you with a sob story fit for a song that only your signature on a loan can fix, don't let your emotions and fondness for the person dictate your decision.
3. Keep your spending in check.
In our consumeristic culture, it's rather difficult to say "no" to that new smartwatch or - if you're a woman - that fancy pair of high heels. How do you say "no?"
There's an obscene amount of money thrown toward advertising efforts every day. Americans are awash with ads. The marketing is clever. It tells us that we need this or that because so and so has this or that. It tells us how much better and happier our lives will be with this or that. It tells us to be a winner and buy this or that - not a loser without it.
So how do we keep our spending in check and say "no" to ourselves when needed?
One word: budget.
Budgeting helps when you have short-term goals to strive for. Start a budget and you'll have clear boundaries on what you should and should not spend. By making these decisions beforehand, you'll be able to avoid impulse purchases.
You'll also be able to judge each expense within the context of your finances as a whole. It's also important to find your reason for budgeting, like saving for retirement or paying your college tuition, so you stick with it.
It's important to find your reason for budgeting so you stick with it. Kyle Hamilton of Forbes.com explains:
Sticking to a budget takes dedication and consistency. Whether you are looking to pay off debt, afford college tuition, or save for retirement, finding a strong reason to budget is an essential step of the process.
4. Avoid more debt and pay it off.
Sometimes, it's hard to say "no" to old habits. Keeping debt around can turn into an old habit, and it's a habit that's worth breaking.
While it's certainly true that you should aggressively pay off debt, many forget that if you just stop incurring more debt, you'll eventually pay it off by making the requested or minimum payments. Saying "no" to more debt means that your existing debt should eventually go bye-bye.
Still, you should aim to aggressively pay off your debt as soon as possible. Say "no" to debt and watch your financial situation greatly improve.
There are plenty more financial situations in which you should say "no." By asking yourself ahead of time what you should and should not do, you're more likely to say "no" whether it's to yourself or to those around you. Make a commitment beforehand to these matters, and you'll find the willpower to do the right thing at the right moment.
Saying "no" isn't always bad - sometimes it's necessary so you can say "yes" to a better life.