Does Your Desire to Save Match Your Reality? – #AskTheAdvisor

a man thinks about spending money but considers his savings plan

Savings: Does Your Desire to Save Match Your Reality?

Mike Desepoli, Heritage Financial Advisory Group

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

Everything else goes to somebody else.”

-Teddy Chafolious

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 your Advisor 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. Don’t have an advisor? Here is a helpful article to show you what to look for.

 

3 Investing Secrets of the Wealthy

a bulldozer and crane moving around block letters to spell the word wealth

Hey everybody hope you all had a wonderful thanksgiving

I was on the road last week visiting some of our clients, and got an idea of a topic I wanted to blog about. I was down in South Carolina, and having just finished up a client meeting I headed over to a sports bar to watch Thursday Night football. While sitting at the bar I was chatting with the patron next to me. A little small talk about what we do for work, and he decided to share with me some of his successes in life. Turns out this gentlemen was quite the successful entrepreneur, so I decided to pick his brain for some investing wisdom.
I summarized that conversation down into 3 investing serets. There is alot you can learn by studying people who have been successful with money, and we want to share a few ideas with you.

1. They don’t obsess over finding the next big thing. They focus on putting their money to work, not wasting time chasing pie in the sky.

2. They don’t care if their portfolio is sexy. Too many people want to own all the most popular tech stocks because they think it makes them look cool. Newsflash….it doesn’t. As long as you are getting the return on your money that you require, who cares if your stocks are popular or obscure. You know who doesn’t care? Wealthy people.

3. Wealth individuals never panic when the market is selling off. In fact, they usually are looking for bargain buy opportunities, like stocks they believe in long term but have suffered temporary price declines.

Hope you guys find these tips helpful. Stay tuned, there’s plenty more to come. Until next time, keep on grinding.

-MD