Can you be too safe with money?  

by Erika Torres

9c93620d51c946ecb4386f744dfa039cAs people interested in personal finance, we are often taught to take the safe road when it comes to money.

I think Eric and I are great examples (yup, that’s me patting ourselves on the back right there) of what can be done when you work on stabilizing and securing your money by living a frugal lifestyle, making sacrifices, and working hard.

But at what point do you feel secure enough? And at what point do you take a big risk to get something you really want?

I ask this, because I find that personal finance isn’t as black and white as some people lead us to believe.

Of course, we should all strive to be responsible with our finances, but does being responsible and risk-averse mean that we let good opportunities pass us by?

For example, take my parents. Back in the mid-1980s, my parents saved and saved hardcore for a year and put together $10k for a down payment on a $120k house. For that first year, they were living paycheck to paycheck. However, as time went on, they made more money, and things got a bit easier in the finance department. In 2005, they sold that house for $600k+.

It was a really big stretch for them at the beginning, but they made it work. They took a big risk but it paid off.

What if we’re always so scared of risk that we let good opportunities pass us by? What if we’re always so afraid of straying from the “right way” to manage finances that we don’t take advantage of these good opportunities?

While we’ve paid off debt and have saved a ton of money, I’m not opposed to going rogue in the future if it will help me reach other goals.

For example, I’m not opposed to taking out a loan for a car, maybe even new! Especially if I can get a 0% interest loan for four years like my mom did on her new car.

I’m not opposed to going into debt for educational purposes if I know it will help my career and that I will comfortably be able to manage the loans.

There are certain things that I am willing to take financial risks for, and perhaps we all have our own threshold.

Where do you take financial risks?


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Mrs. Pancakes November 7, 2014 - 2:50 pm

What a great investment your parents made…i don’t know if it’s like that nowadays with real estate markets but i definitely think a home purchase is a great investment.

Myles Money November 6, 2014 - 12:52 pm

To me those don’t sound like risks: they sound like investments. Spending money on education is investing in yourself and your skillset so you can get a better job in the future. And buying property is either an investment in the local market (if you believe it’s on the up) or an indefinite source of passive income (if it’s a cashflow-positive rental property).

EL November 5, 2014 - 9:26 am

Yes we all should take risks and sometimes they might vary from person to person. For example the risk to buy a house is valid if it appreciates, but what if you buy in a town that didn’t get such a high appreciation in value? Also there’s a risk when you have loans, and are unable to invest the money spent on the loans, to fund a decent retirement. Every decision has a risk tradeoff to consider.

holly@clubthrifty November 4, 2014 - 5:24 am

That’s awesome that your parents made so much when they sold their house. Wow! Best purchase ever. My parents were (and still are) very frugal too. I sometimes wonder if they played it too safe, but they did rather well so it’s hard to judge.

cece October 30, 2014 - 8:34 am

Wow, your parents did awesome with that house. That’s what my parents totally could have done but there were refis and heloc’s along the way. I definitely play it safe and I think a little too safe-hence my lack of investments.

Tonya@Budget and the Beach October 30, 2014 - 7:47 am

Not an easy question to answer. It all depends…on many different situations. I wouldn’t thrown a ton of money into school where I’m at in life right now because it wouldn’t make sense. But if I was in my 20’s or early 30’s I would…but that’s just me. Each person needs to heavily way the pros and cons of their decision. Wow your parents made a killing on the house!

icejules2@hotmail.it October 30, 2014 - 4:35 am

if loan is real =% interest could be good take risk, but usually I tend to write a list of pros and cons before make a decision and now I am looking for my HOME to buy as homeowner I doing confront between several loans companies!!! GREAT POST thanks for sharing

Mrs. Frugalwoods October 29, 2014 - 6:29 pm

That’s an interesting question… I’m rather financially risk-averse and debt-averse. But, my husband and I did buy our house a few years ago, which we’ll turn into a rental property in the future. And, we do invest most of our cash, so I suppose that’s taking risks in some sense. Anything where I see a clear ROI, I’m in favor.


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