Daily Dupaco

Friday, September 14, 2012

Arcade economy

When writing these articles, I often like to use certain events in my life to illustrate the economic world around us. It provides a great platform and an opportunity to better explain all things financial. This has never been more true than during my family's recent visit to my parents' home in South Dakota.

It has become a Poppen family tradition to storm the mall's arcade. The objective is for the kids to win as many tickets as possible on the allotted "tokenage" from Grandpa Dave.

During this trip, my wife scurried about with a bottle of sanitizer trying to disinfect the facility while the kids ran from one machine to the next with an alarming madness and twisted determination. When the smoke from the ticket dispensers cleared and the token cups were emptied, we ventured our way over to the prize booth.

The prize center had been elevated above the entire arcade room, providing a podium for the quintessential pinnacle of achievement. While working through the math necessary for the ticket-to-prize ratio, I happened to see a plastic bow and arrow set. It was similar to one I had as a young boy growing up on the plains of Illinois.

My daughters continued to survey the display cases as if they were brides looking for the perfect wedding ring. In the midst of all this fun and nostalgia, a number of economic theories and financial lessons started to dance around in my head. The arcade—as it seems—is a microcosm of commerce and economy, where children and adults alike learn about opportunity, cost, supply, demand, establishing goals, and financial planning.

The whole point of this story is to simply state that goals—financial or otherwise— ultimately create a system or framework to which our principles are applied. Though our financial goals and objectives may be misplaced at times, they still remain a measure to which we hopefully hold ourselves accountable.

As the economy and markets continue to do their thing, it remains important that we don't lose sight of the financial basics and fundamentals of our respective goals. Whether it is short-term savings or long-term retirement, there is a planning process to each. Hopefully these tips will serve as a catalyst to your process:

  • Determine Short-Term Goals (3–5 years): Pay off credit cards, accumulate down payments, and manage your immediate financial concerns.
  • Establish Long-Term Goals (10+ years): Pay off mortgages and plan for retirement, gifting, college, etc.
  • Quantify Your Goals: For example, "I want to have $30,000 income a year at retirement."
  • Take Action: As stated, implement the steps and mentality needed to achieve your respective goals.
  • Review: Make certain to keep up to date on your plans and goals. When one is achieved, set another.
  • Resolve: Life happens. Always keep your wits about you and analyze any situation.

I'm sure you are wondering what my daughters chose from the available arcade prizes. For the reasonable exchange of 700 tickets, each daughter is the proud owner of her very own plastic bow and arrow set— complete with dagger, suction-cupped arrows, and a quiver, and constructed of the most durable and high-quality plastic known to any arcade west of the Mississippi. And me… well, I'm target practice.

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The investments products sold through LPL Financial are not insured Dupaco Community Credit Union deposits are not NCUA insured. These products are not obligations of Dupaco Community Credit Union and are not endorsed, recommended or guaranteed by Dupaco Community Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

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By Michael Poppen, Dupaco Financial Services 

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