10 Hacks for Getting Serious About Saving
When it comes to saving and planning, most people find themselves stuck in a knowing-doing gap. The know they should have a money plan and be saving—and they want to be saving—but as research by the Federal Reserve Board shows, many don’t. Or they do it in fits and starts, but not consistently enough to make progress. And as most of us can attest, being in that ‘gap’ can be stressful.
Those who’ve closed the gap and gone from knowing to also doing, usually had some ‘aha’ moment that spurred them. The kind where you think, ‘This is serious. I need to make this a priority and just do it.’ And you come up with a plan and make it happen. (And it feels great when you do).
Of course, it can be easier said than done, so I asked my friends at XY Planning Network (who are all fee-only financial planners) if they could share some tips or inspiration that could help you get serious right now and close that gap, so you’re saving more and planning for your important financial and life goals.
Here are their 10 mindset hacks for taking action:
Matt Becker, founder of Mom and Dad Money: “Remember that the real goal of all your financial decisions is to create a life you enjoy. Which means that you don’t have to make all the “right” decisions or do things perfectly. You just have to make decisions that are good enough to get you where you want to go. So take the pressure off yourself to get everything just right. Focus on making one “good enough” decision after another and you’ll be on your way to creating what you want.”
Katie Brewer, CFP®, virtual financial planner, founder of Your Richest Life: Too often, people see financial goals as too huge to tackle. Like trying to lose 50 pounds by the end of the month. Start small, so it’s not overwhelming. The smaller that you can break down your weekly money goals, the better. If you want to save more by eating out less, and you eat lunch out every day, try bringing lunch twice a week. Make that your first money goal and try to stick to it. Once you’ve been consistent for a few weeks, increase the brown-bag lunch days to three days a week. If you maintain some consistency before moving to the next level, you’re creating a habit, and it’s good money habits that will lead to financial well-being.
Jason Preti, CFP®, founder of Unleashed Financial, LLC: “Most people feel like a budget is a financial diet. As an example, I was working on a financial plan with a couple that didn’t want a budget. They felt like it was something controlling. It wasn’t until I explained that a budget is just the opposite, that it’s you controlling your money. It’s the blueprint that allows you to intelligently allocate limited resources (paycheck) to fixed and variable expenses. That gave them a new perspective.”
Lauryn Williams, founder of Worth Winning: “Focus on the rewards. That’s when you get excited about creating better money habits and being more serious about your plan. Too often, budgeting and fiscal responsibility gets you focused on what you have to sacrifice, and it makes you lose steam and make mistakes. Instead, keep the end result in mind and reward yourself. For instance, have an account that is tagged for a vacation. When you can see the rewards, it helps you make that mindset shift.”
Nannette Kamien, principal of Inspiration Financial Planning, LLC: “You can get peace of mind when you get clarity on exactly where you stand. I have a client who came to me with accounts scattered all over the place—investments, retirement, savings, you name it. They had no idea what their current net worth was and what they were spending money on. They always felt strapped. By pulling all of their data together in one place, they were able to see their true current picture. It wasn’t as bad as they thought. They had built a good base, but didn’t even know it. With a couple of tweaks to their spending system, they gained peace of mind and were able to better plan for the future.”
Derek Tharp, CFP®, based in Cedar Rapids, Iowa: “I’ve found that when you discover socially conscious investing, it can get you motivated and excited to invest more and make better money decision. I worked with a widow whose husband had always managed their investments, and when I talked about money, her eyes would glaze over. I knew she was passionate about the environment, so I asked if she would be interested in investing in eco-friendly companies. For the first time, she was interested in her portfolio. She felt good about investing in companies that supported a cause she believed in. She also started making purchase decisions based on things she valued. Investing doesn’t need to just be some painfully boring activity you feel obligated to do, but can actually be a form of authentic self-expression that fulfills a desire to try and make the world a better place.”
Pam Horack. CFP®, founder of Pathfinder Planning: “One reason to plan is to be ready for all life events—good and bad—from buying a house, getting married and having a baby to being protected if you have an income loss from a layoff or disability, for example. It’s better to be proactive and ready for anything than to wish you had thought about it and planned for it. Planning gives you a sense of security and peace of mind.”
Mark Struthers, CFA®, CFP®, founder of Sona Financial: “The magic of compounding is a huge incentive to start saving immediately. One calculation I do that usually gets a ‘wow’ or ‘aha’, is figuring out what your Roth IRA might look like if you max it out until the expected age of retirement. As an example of how compounding works: Say you’re 30 years old and have 35 years until retirement. If you invest $458.33 a month ($5,500 yearly), with an 8% rate of return, at 420 monthly investments, your total at age 65 would be $1,051,355. When you see that a million dollars can be obtainable with a simple Roth IRA, it can be a big carrot for saving and sticking to a budget.”
Katie Gampietro Burke, CFP®, CDFA®, ChFC®, founder of Wealth by Empowerment: When you’re just starting to save, set small goals and celebrate when you achieve them. When you recognize the smallest accomplishment, it can motivate you to make lifestyle changes you thought were impossible. I tell my clients ‘small steps can equal big results.’
Christine Haviaris, CPA, CFP®, founder of TTR Wealth Partners, LLC: “Know that REAL financial planning is for EVERYONE. It’s not reaching a certain age, level of assets, or net worth that gives rise to the need for planning—it’s LIFE. In fact, like compound interest, planning earlier can reap BIG rewards over time in the form of smarter decisions. I love what Carl Richards says in the book The One Page Financial Plan: “Real financial advisors stand between you and the Big Mistake.” Some people are willing and able to invest the time to do it themselves, some need or want help. You can get where you want to go faster and easier with help. Collaboration and creativity is what financial planning is all about.”
We hope this inspires and motivates you to action. Keep us posted in the comments below.
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