By When it comes to the markets and how your investments perform over the course of your career, there isn’t much we can say for certain. Markets are hard to predict! But one thing we can say is this: if the basics of saving aren’t there, it doesn’t matter how well investments are performing. You have to build that base.
I often tell my client families that they need to make saving an addiction. Get into the habit early and stick with it for the long-haul. A solid base of savings and good financial habits are essential for building wealth as you navigate the ups and downs of the financial markets.
How do you go about getting into the savings habit? I have three suggestions I typically tell my clients to start with.
First: Automate!
Take the human error out of the equation by setting automatic transfers into your savings accounts each month. If that money is staring at you from your bank account, it can be tempting to spend it on something else. If you never even see it, well, your future self will thank you.
Second: Know where your money is going.
Redirect some of that into those automatic transfers. Do you have old subscriptions you’re no longer using? Can you find a cheaper phone plan? Sit down and do a thorough audit of every dollar that leaves your bank account, and when you find ones you can eliminate, add that amount into your savings plan.
Third: Make micro decisions on a daily basis to build your savings muscle.
Now, I know that ordering water instead of a beer when you’re out to eat will not make you a millionaire. But it will make you pay attention to what you’re spending, and think about where you could spend less – even if you decide to go head and enjoy that beer. This step is about the mindset of paying attention and finding places to save. Building your mental savings muscle now will make it much easier to save more as you move through your career and earn more.
What questions do you have about getting started with a savings plan? I’m happy to take a look at your unique situation and make any recommendations I think could help you meet your long-term goals. Give me a call.
Article by Kyrk Davis, Senior Partner at Family Financial Partners — a financial services firm in Lexington, Kentucky.