Love Your Money. It Will Love You Back


Love Your Money. It Will Love You Back

How to build a fulfilling long-term relationship with your finances.

(Updated February 2009)

We need to talk.

It's about your finances. How do you feel things are working out between you? Are your needs being met?

If you long for a more fulfilling relationship with your money, remember this simple truth: When your money doesn't feel appreciated, it won't appreciate for you in return.


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You pin your hopes and dreams on your ability to pay for them. So it's certainly worth your while to evaluate your finances and commit to building a long-term alliance that's healthy, fulfilling and prosperous. In other words: Give your money a little R-E-S-P-E-C-T, and it'll reward you exponentially.

"You demonstrate respect and appreciation for money the same way you would anything else you value in your life," says Barbara Stanny, author of Secrets of Six-Figure Women. "If you want it to last, you've got to take care of it. Throw it around carelessly or ignore it completely, and guess what's going to happen?"


There when you need it

One of the top qualities people value in any relationship is loyalty. Treat your money well and it'll be around when you need it most. Here are three ways to love your money so it will love you back:

1. Don't squander its potential. Peter Pumpkin Eater kept his wife in a pumpkin shell. But your money deserves much better. This means putting your cash some place it can earn more money for you. Don't demean it by locking it up in a pitiful savings account that pays peanuts (or less).

Instead, for your short-term savings, consider a high-yield online savings account or money-market mutual fund. Currently, you can find these paying in the 2% range. (Shop for the best savings and money market accounts.)

CDs also make fine choices, but they require commitment. So-called certificates of deposit tie up your money for a fixed amount of time, from a few months to a few years. You pick your time frame and lock in a rate for the period. For example, on average, one-year CDs currently yield 2.22%, according to (Shop for the best CD rates.)


No-interest checking is so old fashioned. Instead, give your money more opportunity to shine with an interest-bearing online checking account through such reputable companies as Everbank, Charles Schwab and ING Direct. They currently pay between 1% and 2%. (Shop for online interest checking accounts.)

2. Show your sensitive side. Abusing your money, spending unwisely and being oblivious to your bad habits are surefire ways to doom your financial relationship.

But too often we're careless and insensitive in less obvious ways. Little things matter, and you want to do everything you can to make sure your money saves its love only for you -- and doesn't spread it around to others like Uncle Sam, your bank or credit-card company. Here are a few ways to make sure you keep more of your money:

  • Don't overpay Uncle Sam when it comes to taxes. (See Get a Pay Raise From Uncle Sam and Tax Savings for Young People to learn more.)

  • Pay off your credit card balances in full each month so you don't waste big bucks on high interest charges. (Learn how to Escape the Credit Card Trap.)

  • Re-shop your car insurance.

  • Get a rewards credit card that gives you free cash, travel or merchandise.

  • Take advantage of lender incentives to lower your student loan rates.

  • Know how to use your credit wisely, to avoid sabotaging your credit score.

3. Plan for a future together. No doubt you dream about your future, and no doubt that future involves growing old together with your money. That means you need to invest for the long haul.

When you're in your twenties and thirties, the place to show your money a good time is in the stock market. And the best way for beginners to jump in is through mutual funds that invest in several different stocks. On average, since 1926, stocks have returned 10% annually (7% after inflation), according to Ibbotson Associates. That's tough to beat elsewhere. (See our 30-Minute Investing Start-Up Kit and our Investing Basics Center for guidance.)

Sure, you'll have your ups and downs. But just as any relationship grows by small acts of love, so will your money grow. Contributing little amounts of money steadily over a long period of time can add up to big bucks (see Behold the Miracle of Compounding). For example, if a 20-year-old saved just $100 a month in a fund earning 10% annually, he'd have nearly $1 million by the time he turned 65. And if he increased his contributions as his paychecks increased, his money could grow to $1.5 million or $2 million.

Now that's loving you back.