I know what to do, I just need to do it. We hear this all the time. We hear it with diets, working out, job-hunting, and of course investing. We live in a world where you can have 90 servings of Dippin’ Dots or an Afro wig for your dog delivered to your house tomorrow (yes both of these are available on Amazon, I looked it up). Temptations like these make it hard to think about saving. Not to mention, retailers make it easy to buy.
Retailers have done everything to put their products in front of our faces while removing every barrier between checkout and your wallet. Even with apps to help track spending, it can feel impossible to save. Fortunately, we can use the same strategies retailers use to meet our savings goals.
Automate your savings
One of the best strategies to increase savings is to automate it. If your company has a 401(k) or 403(b), money is taken right out of your check and invested immediately. You can also set your bank account to send money to a savings or investment account on a regular interval. This way you never miss an opportunity to save and can map out how and when you will meet your goals.
Set obtainable goals
Telling yourself I will save as much as possible sounds good but how much is possible? Try setting definable amounts like 20% of your income, or contribute the max to an IRA. Than you can set an automatic savings plan to meet those goals. Want $5,500 in your IRA this year? That’s $212 saved from a bi-weekly paycheck. I’d also suggest your savings account not be your checking account.
Pay yourself first
Make savings a priority. Put money for yourself away first. Then pay your bills and debts. Lastly, you can spend what’s left. All too often I see this in reverse where people go out and have fun, then scramble to pay their mortgage and credit card bills, and hopefully have some left to save at the end. Do this long enough and you will become familiar with phrases like “caught in the rat race” and “check roulette”.
I often tell people I am poor by design. Spending money is easy. In fact I might be better than most at it. By implementing the strategies outlined above though, it has been possible to limit spending while maximizing saving. Once a plan is set, consider taking it to a CERTIFIED FINANCIAL PLANNERTM professional. A planner can help project your plan into the future so you can see just how your wealth can grow. With a plan in place, these meetings and projections will be motivating, not defeating.
Happy Investing!