By Shawndi Purselley, CFP®, CDFA®, Owner and Co-Founder, Wealth Advisor
I recently attended an event in which the speaker discussed how to build a legitimate business and become a bona fide businesswoman. She asked the following question during her presentation: What are you willing to do today? The speaker was of course challenging her audience to consider what we are willing to do today in order to grow our business. She asked this question knowing that reaching the ultimate goal would take many steps in order to complete. But the presentation made me think about the clients I talk with. Often the beginning of long-term financial security seems like such a heavy weight and large task. Planning for financial security continues to get put off due to a lack of ability to figure out exactly what to do first.
I recently sold my home and needed to begin packing to move. My husband and I live in a relatively large house with the last two of our children and two dogs. Needless to say, we have accumulated a lot of “stuff” from raising children. My husband and I work all day. By the time we would finish our workdays, evening chores, and events, we were too tired to think through what to pack and how to get them organized once we got the boxes into the new house. I was drowning in decision making misery! Then I remembered the speaker’s words: what are you willing to do today? Thinking through a large task seems much easier when I only need to consider what I am willing to do today. I concluded that I didn’t have to have everything planned out beginning to end in order to simply begin the process of packing. I decided I was willing to go to the store and purchase a small number of boxes and moving supplies. Once I purchased the moving supplies I decided I was willing to start to assemble the boxes. The day after that, I was willing to start packing the kitchen, utility room and pantry items I wouldn’t need for a few weeks. As I was filling the boxes, my husband placed them in our garage. Slowly but surely, we packed up and have moved into our new home.
Building long term sustainable financial security is a long and intentional process. It doesn’t just happen overnight. That being said, you don’t have to wait on the perfect plan to get started. More often than not, your financial plan will evolve throughout your lifetime and will need to be updated, no matter how well you think you have planned it out. It is better to get started with simply asking yourself “what am I willing to do today?”
Here are a few things you can do today to help work towards your financial security:
Save a small amount into your company sponsored 401k or IRA. With employers allowing for an automatic deduction from your paycheck before you ever receive the dollars, adding a small amount of your paycheck to your retirement plan is a great “easy button” approach to starting to build your retirement funds. Most employers will allow for a very small monthly contribution.
Pay extra towards debt each month. This doesn’t have to cost you hundreds per month. Credit cards, banks, and other lenders will typically accept any amount of over payment towards your principal amount owed. For example, if you were to pay just two extra mortgage payments a year, online calculators show that you could pay your mortgage off as much as 3 years ahead of schedule.
Start and maintaining an emergency fund. I find that most people that get into financial difficulties due to unforeseen circumstances typically didn’t have an emergency fund to tap into when needed. This could be as simple as setting up a savings account at your bank and transferring money into it from each paycheck.
Build a budget. Financial planning 101, right? So why does building a budget seem so difficult? My suggestion is to track all of your spending for 60-90 days and then categorize each dollar. You can then see where you are overspending. From there, create a family budget around your “needs” and “wants.” It is easier to build a plan going forward when you know where you have been. For example; if you find you are spending $500 a month on going out to eat, then agree to reduce this to $250 per month.
Small steps can make a big impact in helping you pursue your goal. Don’t put off a big task like establishing financial security because you don’t know where to start or don’t feel like small steps are worthwhile. Give us a call and we can help you prioritize getting started.