“Do you believe in unicorns?” asked my daughter.
“No” I said. “But, have you ever heard of narwhals? They’re sort of unicorns of the sea.”

One is imaginary and one is real. They’re similar but different.
Most of us do a lot of imagining, or fantasizing, about having and doing all sorts of things. As long as we keep ourselves grounded in reality we don’t have a problem.
Where having and doing things is concerned, we have to keep ourselves grounded in reality, financially speaking, to avoid problems. We can wish we had all sorts of things and wish we could go all sorts of places. But, as Steven Wright says, “You can’t have everything. Where would you put it?”

The current financial realities are: interest rates close to zero for savers, many people with high debt loads, many people with mortgages underwater and a difficult job hunting environment for those out of work.
In spite of that, to deal with our reality we have to apply good financial principles. We have to cut debt, if possible, build cash, spend cash and keep our investments simple.

Maintaining good, basic financial practices is not rocket science. It’s more like managing your weight. The basic requirements of weight management (and weight loss) are tied to good habits: consume fewer calories than you burn, exercise and eat the right kinds of food. If we consistently consume more calories than we burn and eat a lot of food containing calories that are hard to get rid off, we put on weight. That extra weight is then difficult to lose.

The basic requirements of good financial practices and of managing your money are also tied to good habits: spend less than you earn, save money on a regular basis and manage and/or avoid debt. Keep doing that – make it a habit. If we spend less than we earn, there is money available to be saved or to pay off debt. We have to make good choices and decisions. A budget helps us be in control of our spending. Stick to your budget. Stay away from credit card spending, especially if you cannot pay off your card every month. The alternative is being financially overweight: too much debt, spending money we don’t really have, no extra cash for emergencies.

If you are saving money, or have an emergency fund in a savings account, try to find the highest interest rate you can. That may require some searching and will probably mean an on-line bank. Make sure it is FDIC insured. Current interest rates are very low compared to a few years ago and will most likely stay low for a long time. Try to earn as much interest as possible.
If you have an emergency fund and are able to save money beyond that, make a point of using some of your savings to reduce any outstanding debt.

While you’re at it, work with your children on developing good habits also. Just as parents are responsible for helping our children develop good eating and exercise habits, we are also responsible for helping our children learn about the real financial world and developing good financial habits. Good habits developed early in life usually turn into good habits practiced later in life. As Solomon said, “Direct your children onto the right path, and when they are older, they will not leave it.” (Prov. 22: 6, NLT)

As long as you remain realistic it’s okay to dream about how you would like things to be, and even plan accordingly. It’s even okay to believe in unicorns!

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