5 financial planners share unusual tips and tricks to help their clients save more money
Hug start small
5 financial planners share unusual tips and tricks to help their clients save more money
Certified financier Kevin Mahoney says, “Small, but consistent, increases in your retirement savings rate will help get you on track financially for later in life—even if you’re not particular about putting money toward that purpose.” Don’t get excited.” Planner (CFP) at Illumina.
How small is small? Mahoney says increasing contributions to retirement accounts by just 1% over time can make a big difference. He suggests using different signs on the calendar (such as the start of a new year, birthdays, or seasonal changes) to make these gradual increases.
“The key to strong long-term savings rates and dollar volume is continuing progress,” Mahoney says.
Build your own matching schedule
It is common for companies to raise money for charity by promising to match donations. If you pay $50, they’ll match it – that sort of thing. And you can do the same for yourself.
“If you can buy something you don’t need, you may be able to save even more,” explains Justin Pritchard, CFP and founder of Approach Financial, Inc.
“For example, if you buy a $350 toy, whether it’s a scooter, a surfboard, or something else, is there any way to add $350 to your savings? You can plan to do it over several months or outright. “
Pritchard says this approach ensures that you don’t spend all your money on your own needs, but that you enjoy the present while preparing for the future. “It raises the stakes when you spend money,” he says, “which can lead to more brain-spending.”
Take advantage of any income you receive
Jim Blankenship, CFP and founder of Blankenship Financial Planning, believes that you should enjoy the money you worked hard to earn.
“You should reward yourself for the hard work,” he says, “while at the same time using it as an opportunity to increase your savings rate.”
He suggests breaking up any increase in salary and allocating some to discretionary spending and the rest to savings. Set up an automatic contribution so that 75% of the increased cash in your bank account goes to savings or investments, for example, and the other 25% to enjoy freely for spending.
“This can be a lifelong strategy, especially if you’re in the type of job that has an annual salary increase cycle,” he says. “In no time at all, you’re saving at a much higher rate than you were before, and you hardly noticed it.”
Be super precise with your budgeting strategy
Most of us want to save, but it is difficult to do so if you reach the end of the month and there is nothing left to contribute towards the goal. That’s why Jovan Johnson, CFP and co-owner of Peace of Wealth Planning, helps clients establish a zero-based budgeting system based on their individual preferences that delivers a job for every dollar.
“With this budgeting system,” Johnson explains, “if they run out of money for the month in the entertainment category, they have to wait until the next month or use money from another category.”
Categories include not only what you want to spend, but also what you want to save for. “I’ve found that when we add specific goals to savings accounts, it makes us more motivated to save money,” Johnson says. If something is important to you, make it a line item in your zero-based budget.
Make saving a game you can win
Simplifying your spending and saving habits can be a good way to gain control of the aspects of your financial life that you may struggle with, says Ryan Sterling, a financial planner and founder of Future You Wealth.
Sterling brings games and challenges to its customers every month. “Examples of this include days without spending,” he explains. Other games include “cash-only” week, where customers can shop in cash for only one week out of the month, and what may be most unique: “Happy Hour Month, where the whole month you settle Go out to eat at places and times with happy hour pricing,” says Sterling.
He believes reducing your spending is useful because it “ignites our competitive spirit, forces us to embrace our creativity, and it makes us think of saving and budgeting as a fun activity.” adds up.”
If making a game with your money doesn’t sound like your idea of fun, Sterling proposes to make your own money rules instead. “I have clients come in with a list of their money and spending rules. Rules for making and spending money bring personal values to the surface and prompt customers to say ‘yes’ to spending money on those things and experiences.” allow those that are in alignment with their values, and ‘no’ that add little or no value.”