The Bureau of Economic Analysis recently announced personal income is up 2.7 percent in the past year. Spending is also up 3.7 percent in the same time frame. What can we conclude from these numbers? In the past year paychecks have increased, and it’s a safe assumption that those increases (and then some) went right back into the economy. We’ve been told time and time again to save at least some of our earnings, but still most people give in to spending instead of saving. Here’s what you need to know to become better at saving.
Identify Short Term and Long Term Financial Goals
What do you want to save money towards and when do you want to achieve that goal? Short term goals are often defined as achievable in five years or less. They can include things like next year’s family vacation and even a car. Long term goals tend to be past five years and include goals like saving for college or retirement. Clearly identifying your goal, the desirable timeframe, and why it’s important, can help tighten your purse strings and push you to skipping superfluous purchases.
Some people say it’s never too late to start saving, but that’s not true. If there’s a deadline to meet, say your retirement date, then beginning the week before will likely reap little savings. The problem some people run into is thinking it’s too late to start saving so they don’t bother, even though beginning later is better than never. If you haven’t begun saving for retirement, then it’s time to start.
Putting money away every paycheck is easy if you live within your means. This means making a budget to allocate where every penny goes, then sticking with it. It’s interesting when people receive salary increases without having additional bills to pay. Usually that small percentage increase goes to additional meals out and purchasing more things. If that little bit of money was put away though, over the course of a few months it wouldn’t be such a small amount anymore.
Make It Work
Calculating how much you can save from each paycheck, then actually saving it, will help you achieve your financial goals. Some companies offer to immediately put designated funds into a savings or investment accounts. This is a great option that makes you save without realizing you’re saving. Now that you’ve nailed the putting money away part, where should you put it? Consider working with a financial advisor to help identify good options that fit well with your financial goals.
Of course life is meant to be enjoyed, a splurge here and there isn’t going to derail your financial goals, but sticking to a budget and saving regularly should be ingrained habits. Making your funds work through investments can possibly achieve your goals sooner. Once you’ve reached your financial goals, pat yourself on the back and enjoy your efforts.
Whether you have a dollar or a million dollars in your retirement account you will be able to explore the value of a real advisor simply by visiting the Self Directed Brokerage Account advisor contact site. From this site you can begin to take advantage of the features of your retirement plan.
To learn more about Rick Willoughby, view his Paladin Registry research report.