Financial Fitness: How To Stay On Track

Financial-Fitness

Keeping your finances on track isn’t always easy, especially if you have a family or past debts such as student loans. It can be difficult to make sure your money is going to the right places every month; many families have to make tough decisions about whether they can spend money on entertainment or pay the bills on time, while others owe so much to credit card companies that they can barely stay afloat.

Staying financially fit is a hard job made even more difficult by the fact that the cost of living doesn’t always line up with our salaries. Thinking about planning for your kids’ futures–and for your own retirement–can be incredibly stressful, and can even lead to depression. Learning how to stay on track when it comes to how much you’re spending and saving can be really beneficial in so many ways; keep reading for some great tips on how to get started.

 

List your debts

You probably have a good idea of where your debt lies; for many people, it’s mostly credit cards and student loans. However, you may be surprised after listing each debt and the amount owed on a piece of paper. Having a general idea of your finances and seeing them in front of you are two very different things, and it’s important to have a good handle on everything you owe, from department store credit cards to medical bills.

 

Create a budget

Creating a budget is always a little harder than it sounds, especially if you have a large family. The best way to get started is to look at your monthly expenditures first; go through your checking account and look for recurring charges. Add up everything you spend in a month and compare it to your income, then look for ways you can save money on each of those items. Gas, for instance, can be a huge expense if you live far away from work or have to shuttle the kids to and from school and activities. Carpooling, using public transportation, and riding a bike are all great ways to save money there (and they are much better for the environment). If you enjoy eating out often, cut back by taking your lunch to work or school, and maybe save one night a week for a dinner splurge.

 

Set a goal

It can be really easy to keep spending the way you have been if you don’t have a goal set. What is the most important financial goal for you? If it’s saving for your child’s college fund or buying a new house, start a savings account specifically with that in mind. Be realistic when setting your goal, and look at your budget to see how much you can sock away each payday without it affecting you negatively for the month.

 

Look at life insurance

No one wants to imagine that one day they won’t be with their families, but making sure you have a great life insurance policy can factor into your financial wellness and sustain your loved ones even after you’re gone. Not only that, you can sell it to help pay for your retirement down the road if that becomes necessary and if your life insurance policy is no longer beneficial to you or your loved ones.

Staying on track financially takes some work, but there are ways to do it without creating stress and heartache for you and your family. A good plan can go a long way, so talk to a financial advisor to figure out the best ways to save and make responsible decisions.

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Savings: Does Your Desire to Save Match Your Reality?

“The only money that’s really yours is the money you spend.

Everything else goes to somebody else.”

Teddy Chafolious

Piggy Bank

That piggy bank we remember from childhood wasn’t just a place to store our birthday money and spare change: it was a lesson, a way our parents encouraged us to get into the habit of saving. Many parents even go so far as to deposit half of any monetary gifts their children receive directly into a savings account, just to drive the point home. Adults who took that lesson to heart might set up automatic deposits into long-term savings or retirement accounts from their paychecks every month – a modern mechanism for implementing this age-old lesson.

 

But the quote from Teddy Chafolious raises an important point: What are we saving FOR? Many new investors come to their financial advisors with a number in mind: “I want to save $1 million before I retire.” There’s even something of a fad among millennials who work as hard as they can, save as much as they can, and try to retire before age 50.

 

But why? After all, “you can’t take it with you.”

 

It’s important to have financial goals and committing to a regular savings plan is good first step towards achieving them. But if you treat your long-term financial planning as just a series of targets to hit, or numbers you have to drive up as much as possible, your return on investment is going to be a lot higher than your Return on Life – the feelings of happiness and fulfillment that your financial planning should provide you.

How much are Americans saving?

According to the US Bureau of Economic Analysis, Americans today are saving a lot less than they have in years past. Personal savings in the United States averaged 8.29 percent from 1959 until 2017. The rate for 2017 is hovering around 3 percent. Experts tie this historically low savings rate to increased household spending, which continues to outpace wage increases, and high levels of revolving debt, like credit cards.

Figures like these drive many people to the opposite end of the spectrum: they save as much as they possibly can, especially if they’re nearing retirement.

Finding balance.

We tend to think that the person saving more is doing a better job of managing his or her money than the person saving too little. But neither extreme is going to maximize your Return on Life. Spend too much enjoying the now, and you might end up having to work much longer than you want to – maybe even all the way through retirement. Save too much too early, and you and your family might miss out on the experiences that you deserve to enjoy with your hard-earned money: big family vacations, a new home, creature comforts, entertainment and culture that will enrich all of your lives.

Worse, new retirees who have spent their lives stuck in “savings mode” often have trouble transitioning to the reward mentality that should provide for a meaningful retirement. These retirees worry so much about running out of money that they often neglect their own wants and needs, to their emotional and physical detriment.

Reality check.

So how do you find that balance between enjoying today and preparing for tomorrow?

First, ask yourself if your rate of savings is in line with your reality. Are you saving so much that you’re not enjoying life as much as you could be? Or are you hovering around that 3 percent savings figure, telling yourself that you’re putting enough money away when you know, deep down, that you’re not?

Next, make an appointment with us to talk about your financial goals, and your vision for a dream retirement. Work together to find that saving/spending balance that’s going to align your savings with your reality, and hopefully, your goals and dreams. Find that sweet spot, and your money won’t just be numbers on a balance sheet. It will be yours.