Monday, January 6, 2014

Want to Assure Savings Success in 2014? Put it on Paper!

Want to assure savings success in 2014? Put it on paper!

Happy New Year! My entire team and I wish you and your family all the best this year. I’m guessing that you probably have a few things you’d like to accomplish this year (a.k.a. resolutions). That’s good! But don’t forget what we already know about resolutions – most of them evaporate without a trace within a couple months, if not weeks.

Obviously, that’s a broad statement and probably does not apply to everyone. So let me narrow it down to my area of specialization. Here are some steps my team has used over the years to help countless folks overcome the ever-challenging task of really following through with their resolution to start saving money – toward retirement, down payment on a home, their children’s college tuition, emergency money, or any other purpose.   

Determine your discretionary surplus – on paper!

Yeah, I know! Like most folks, you probably don’t have anything left over at the end of the month, right? In the more than a decade that we’ve been coaching folks through this exercise, the thing I always find completely mind blowing is that nine of 10 people didn’t think they could afford to save anything. But in the end, they surprised themselves. Notice, though, that my point specifically says “on paper” – not just in your mind. I’m not doubting or challenging you. All I’m suggesting is to let the paper do the talking. As they say, numbers don’t lie.

What this exercise requires is writing down what you spend your money on with as much detail as possible. Ideally, I’d suggest that you work with a financial advisor who has experience in expense/cash-flow management, so they can help you capture everything. Like I mentioned earlier, in almost every case I have personally overseen, we ended up with a surplus on paper, even though these folks didn’t believe they had that much discretionary spending or could save anything.
So what causes the gap between our beliefs and the reality we can see when we write it down? Obviously there may be many causes, but here’s what I have observed in my practice. We are all impulse spenders at some level. Some folks flat-out spend on unnecessary stuff. But for the most part, the trickier issue has to do with the fact that you are probably spending way too much money on stuff you consider to be legitimate.  By penning your spending, you will get a true bird’s eye view, and the rest of the exercise will take its natural course.
At our firm, we simply review these numbers with the client, speaking each line item out loud. What happens as we go down the list is that the client reviews their own spending and makes whichever adjustments they deem necessary. On hearing the expenses read out loud, if they thought they were spending too much in a given area, they reduced it to what they believed to be reasonable.  Try this exercise. I can tell, you without a doubt, you’ll be pleasantly surprised by what you find.

Commit to saving: “Automatic bank draft, please!”
Let me put it this way: the reason most folks aren’t saving what they could save isn’t because they don’t want to or don’t understand the importance of saving. It’s because they don’t have anything left at the end of the day to save. So here’s the catch! As soon as that money hits your account, it needs to go into savings – automatically – because waiting to see that surplus appear at the end of the mouth might never happen. Remember, the genesis of the problem for most of us is impulse/overspending, although we sometimes find this difficult to admit.
Another interesting observation is that most folks, once they start saving  via bank draft – are pleasantly surprised by the fact that their standards of living don’t take any hits. And if it weren’t for the debits on their bank statements, they wouldn’t even notice that they are saving.

Make yourself accountable
You need to be accountable to someone. Well, technically speaking, it’s your life and money, so you don’t have to. But I’m going to suggest that if you really want to make this resolution a reality, you call a financial advisor who has the right kind of experience in this area and is willing to take the time to work with you.  I’d be glad to refer you to the professionals on my team. Simply call 877.656.9111 or visit to set up your complimentary consultation today.
Want to learn how you can KEEP more of your retirement money, even if the market crashes again? Call 877.656.9111 or visit to talk with an experienced retirement professional with a proven track record TODAY!

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