Most Americans are worried they don’t have enough savings to retire, but few of them take steps to do something about it.
To make matters worse, a lot of the advice that’s most widely available doesn’t say much of anything beyond “spend less, save more,” which sounds great, but isn’t actually a plan. There’s just as much strategy involved in taking control of your finances as in anything else. Rather than simply telling their clients to save more, a good financial advisor should tell them how they can go about doing that. Consider the following 4 (four) basic steps.
- Plan for Your Life to Happen
Life does happen. We know it and we’ve all experienced times when our finances took a hit because something happened we had no control over. We don’t have the ability to predict the specific events that wreak havoc on our finances, but we should all anticipate that things will happen and we can prepare accordingly.
Whether it’s making sure you have the right tools (safety-net) in-place to ensure proper protection for you and your family such as maintaining financial commitments, paying off your debts in the most efficient manner, a financial professional can help you make sure you’re covered when life-changing events detour your plan. Consider how basic tools such as disability, life, and long-term care insurance are designed to ensure personal and financial security while preserving future income for our family and ourselves.
- Plan Your Budget Strategically
No one likes the word “budget.” Much like the word “diet,” it’s associated with denial and scarcity, rather than abundance.
But budgeting should be all about abundance. Rather than focusing on the idea that your budget won’t allow you to have certain things, think about the goals you can achieve as a result of strategic budgeting. You might have to say no to a few meals out or coffee at Starbucks, but by doing so you can say yes to the big purchases you’ll need later on (a car, home repairs, travel, etc.)
- Plan to Handle Your Debt(s)
Many people think they can’t save because they have to pay off their debt first. While it’s important not to accumulate debt, there are ways to reduce your debt while still setting money aside. Specifically, most financial planners advise tackling your smallest debts first, and once you’ve eliminated those, move onto the larger debts until you’re left with just one large debt, like your student loan or a mortgage.
This strategy has several advantages. First, getting rid of the smaller debts leaves you with more income to tackle the larger debts, whereas trying to pay off all your debts at once leaves your finances scattered and you feeling stressed and overwhelmed. Second, paying off small debts right away feels good. It leaves you with a sense of accomplishment that will make it easier for you to take on the next financial challenge.
While it’s true that you can’t save for retirement without saving money, there are ways you can strategically handle your unique financial situation so that you can afford to buy everything you need, while still paying off all your debts and saving for retirement. Putting a financial plan together saves, not only money, but also time and energy you used to spend worrying about how you were going to retire.
- Plan Your Choice(s) – Take Your Action!
Whether you take the steps to create an actionable financial plan or not is entirely up to you. Contact your financial advisor to see if you’re on the right track for financial security. If you don’t currently have a financial advisor, contact Eleonore Weber at Your Life Security for a complimentary session.
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