Phone: 609 620-1770
Getting Savings Off to a Strong Start in 2014
In response to the last blog posted here near the end of 2013 I received an e-mail from a fairly new client with the same title of this post. In the e-mail she writes to me: "Great blog post on increasing savings by 1% per year; it's got me inspired. Let's up my monthly contribution by $100 and to get the year started off right let's transfer $20k from my checking account into the brokerage account." As a financial planner who is constantly urging clients to automate their savings, this could not warm my heart more!
For those who are thinking, 'wow I could never have that level of self-control' I would like to challenge that pre-conception. In a new book Scarcity: Why Having Too Little Means So Much, the authors challenge the notion that lack of self-control is behind the failure of most folks to save enough. Their research indicates that it is a lack of attention. Many people truly can save more, they are just so focused on their immediate expenses that they are simply unable to focus on saving for the future. One known solution to this problem is to simply automate one's savings. Most of us will simply spend whatever comes into our checking account. (And many times, more than even that!) One way to break this cycle is to increase what is automatically withdrawn from our paychecks for 401k contributions as well as any other savings' accounts. This is why I strongly encourage all of our clients to automate their savings programs. So even if you are doing a great job maximizing your 401k or other employer-sponsored program, make sure you automate savings towards other goals. Whether it is saving for a child's education in a 529 account, a savings fund for a future home or auto, or just a commitment to put money towards an investment account for the long-term I strongly encourage you to automate, automate, automate!
If you would like to discuss more about your creating a financial plan and how best to automate your savings to acheive your goals, feel free to reach out to me at 609-620-1770.