More and more, companies are dispensing with traditional annual employee reviews. They say this is out of sensitivity to a new generation of employees who find reviews stressful. The real reason may be that dispensing with employee reviews saves companies money -- albeit at the expense of their employees.
Microsoft and Dell are among the high-profile companies that have made news recently by dumping annual employee reviews, and Silicon Valley has long turned its nose up at such traditional means of measuring performance and managing people. For many employees, the initial reaction is relief, but they would be wise to look closer. Without that annual review process, they could find that opportunities to get a raise are fewer and more difficult to obtain.
Nothing Ventured, Nothing Gained
As much as you may view a formal review as resembling an interrogation scene out of George Orwell's "1984," it should work to your benefit -- both financially and in terms of feeling more connected to your workplace.
I remember my first mortgage. Getting it seemed like a bureaucratic hurdle on the way toward buying a home, and I couldn't wait to get the paperwork done and out of the way. By the time we bought our second house, I was 10 years older and wiser. I played a much more active role in choosing a mortgage and negotiating terms that time, and saved us a fair amount of money as a result.
Assuming most people are about as naive as I was when they obtain their first mortgage, I want to offer some tips on how to be less passive so you can actively take control of your mortgage situation. My first time, I didn't think of it as a process that starts before you even apply for a mortgage, continues on as you choose a home loan, and even carries through once you are in your house and making payments on your loan -- but it's very helpful if you do.
Dieting is not a popular topic around the holiday season; but perhaps with caloric temptations everywhere you turn, this is the best time to be thinking about it. Similarly, the holidays are a time of year when people tend to let themselves go financially, so a reminder about financial discipline might also be timely. After all, working toward financial goals is like dieting.
I recently wrote about things that help me worry less about money, and one reader commented that what she finds comforting is being able to measure progress. That's a very good point, and it started me down the road to thinking about how working toward financial goals is a lot like dieting.
I have all too much experience with dieting -- my weight has tended to yo-yo quite a bit over the years -- and I also spend much of my time thinking about strategies for meeting financial goals. In thinking about the two topics together, I came up with seven ways that working toward financial goals is like dieting:
- Goals should be incremental rather than all-or-nothing. It's not so bad stepping on the scale when you first start a diet, because you can be comforted by the lofty goal of how much weight you intend to lose. The hard part comes about a week later when, after days of sacrificing and exercising, you find that you have only made one pound's worth of progress toward your 30-pound weight-loss goal. It's a little discouraging -- much like your first year of saving for retirement, when you find that after a year of sacrificing part of your paycheck, your 401(k) balance is only $3,000 toward your goal of saving a million dollars.
This is where incremental goals become important. If you know that losing a pound in that first week of dieting, or saving $3,000 in that first year of 401(k) contributions, is what you need to be on track to eventually make your long-term target, then you can take satisfaction from having met your goal for that first time period. From there, you set your sights on the next short-term goal.
- Be realistic about being better tomorrow. We tend to have this touching faith in how virtuous we will be sometime in the indeterminate future -- people expect they'll eat less when summer comes or save more when they're in their 40s. But to make dieting or saving work, you can't lean too heavily on that future you. Chances are, that you will be no more up for the task than the current you, so make sure you do your share of sacrificing now.
- Build in room to be bad occasionally, within limits. Few of us -- certainly not me -- are built for living a spartan existence full time. Build the occasional indulgence into your diet or your savings plan. If you can limit such things by planning for them, you can give yourself a much-needed break now and then without completely blowing the good work you've been doing.
- Don't let one setback become an excuse for giving up. And then there are the indulgences that aren't planned. If that happens, the main thing is to bounce back strong. There is a tendency once you overeat or overspend to feel that now you've blown it and your original plan has become futile. Don't give up just because of an occasional screw-up. Make a new plan to get back on track.
- Hold yourself accountable. This is very important, because you can always find an excuse for bad behavior if you want one. Don't accept excuses. If you overeat or overspend, it is because you failed to live up to your responsibility to yourself, and you need to do better next time.
- Announcing your intentions can create additional accountability. Sometimes, telling people that you intend to lose 30 pounds puts the pressure on yourself to follow through -- and it might even make others more sensitive about not putting temptation in your way. It's a little tougher to be so open about your financial goals, but simply mentioning to a few close friends that you are trying to save more money can have a positive effect on your behavior and theirs.
- Think of it as a lifestyle change, not a temporary project. I struggle with this nutritionally, but I am getting better. Permanently changing your habits can actually be easier than gearing up for occasional periods of good behavior because, with dieting and saving, it is easier to stay on track than it is to get back in shape once you've let things go.
Nutrition is a very complex subject, and so is finance. However, while there are many nuances to be mastered, to a large extent a successful diet and a successful financial plan both come down to common sense and willpower. Best of luck to all of us for mustering both common sense and willpower as we head into 2016!<
Retirement lifestyles depend on your financial success -- but financial success is part reality and part perception. In fact, if you moderate what you perceive as financial success, you could improve the financial reality of your future.
It's particularly important to consider this as you approach retirement, but this dynamic actually starts well before you're ready to retire. It has to do with what kind of lifestyle you think you need.
It might be the incessant nagging of an unpaid bill or a stomach-churning plunge in the stock market, but suddenly you don't know how to stop worrying about money. Join the club.
Even having a decent nest egg of savings and a solid financial plan is no cure for money worries because the more you know about personal finance, the more you understand how fragile any plan and any investment program can be. Still, I worry about money less than I used to, thanks to a collection of habits and attitudes that have helped cushion me from obsessing about money. That means I've come a long way, because there was a time when money was a constant worry.
A Sobering Graduation
Like most people, I am a product of my experiences; and when it comes to personal finances, the most important formative experience was graduating college during the early 1980s, a dismal period for the job market. In fact, my senior year -- the time when one is supposed to be making career plans and lining up a job -- was marked by the highest unemployment rates of the post-World War II era. So, I spent the first several months after my college graduation caulking windows and scraping paint, stocking shelves in a supermarket, and working as a busboy in a greasy spoon. All minimum wage jobs, and even then the work wasn't always steady.
Financial planning is like taking a long car trip. You plan your route, your schedule, and your eventual destination in advance; but then you have to be prepared to adjust for detours, traffic delays, bad weather, fatigue or other unexpected changes.
When it comes to financial planning, you face this same conflict between sticking to a long-range plan and dealing with the realities of life that occur along the way. The key is being able to distinguish between legitimate reasons to change your plan and simply getting misdirected by new developments until you no longer know where you are heading.
Life happens, and you adjust
Examples of life developments that may warrant a change in your financial plan are:
You pay for convenience. That's the simple reality of economics. Having a cab -- or even an Ubermobile -- pick you up is more expensive than catching a bus. Eating out costs more than making a meal yourself.
So, when you consider the tremendous convenience credit cards offer, it should be no surprise that consumers end up paying a hefty price to add convenience to their lives. In many cases, though, the price is higher than it should be.
You can't fix everything about the high price of credit cards; but the more you know about the various ways they can cost you too much, the more you can eliminate at least some of that unnecessary expense. Here are eight examples:
Let me say for the record that I hate rushing the holiday season - the appearance of Santa Claus in the stores as soon as the Halloween decorations are cleared out, hearing Christmas carols before the first snow has fallen, that kind of thing.
So why am I writing about holiday shopping when temperatures are still pushing 80 degrees at the end of September?
Well, I'm a great believer that people could better manage their finances if they did more planning ahead rather than simply reacting on the spur of the moment. <
Does quitting have a bad rap?
When it comes to the job market, quitting is happening more these days than at any time in the past several years. We tend to associate quitting with giving up or giving in, so you may be surprised to learn that economists are very happy when people quit.
This might be a good time to consider why economists like it when you quit your job, and how you can make quitting work for you.
The cost to file income taxes can fall anywhere between zero dollars -- as in you do your taxes yourself and file for free -- and several hundred dollars, with an average cost of $273 for using a tax preparer, less if you don't itemize ($159), according to the most recent data available from the National Society of Accountants.
To judge the value correctly, though, those costs have to be weighed against the results you get, your own comfort level with going DIY, plus what could go wrong if things don't work out.