Outside Economics

But It's So Hard To Save Money...

Posted by Wendell Brock, MBA, ChFC on Fri, Apr 28, 2017

Providing financial counseling for many years, a question like this often comes up: Why is it hard to start saving? Money is a very emotional thing and we all have our own thoughts and opinions about it’s use, which can be very personal. We can always jusBank_1.jpgtify our wants into needs - its a matter of developing the strongest argument as to why this or that is a need not a want, thus eating up our entire pay check on the mixture of real needs and perceived needs (real wants). 

Here are some reasons why it is hard to start saving money: 

1. Saving money requires self discipline - lots and lots of self discipline. There is no one around “forcing” us to save money, like the government forces us to pay taxes. Saving is 100% on us personally. With each and every paycheck that comes in we have to make the choice to save. Establishing a habit of saving comes after months and perhaps years of successful saving.

2. The money we want to save is competing with the money we want to spend - there are so many wants and perceived needs that we look at and say, “I can afford this” and so we spend the money before saving. When in reality we might not be able to afford it, but because we want it we buy it.

3. People tend to spend first and save what is left over, when they should save first and spend what is left over. These priorities are mixed up. When we spend first and try to save what is left over there is never enough to save. We can always spend what we earn and our spending/perceived needs increases with our income.

4. Successful savers save first. They pay themselves first and pay others last. They sacrifice their short-term wants for long-term goals. They understand the difference between needs and wants and they focus on their self-discipline in other areas of their life so saving becomes a more natural extension of their disciplined life. In our society of instant gratification, which is filled with stuff, we focus on the things we don’t have. With some justification we make those things into needs, and exchange our future savings for wants, thinking they will bring us happiness, ignoring our future.

Keeping a budget (you can learn more at Budgeting 101) in line is a very key element to saving money. Our spending can and often does expand with our earnings, making every purchase important! One key to being a successful saver is to have an emergency fund established. And ONLY use if for emergencies! 

How do you go about saving? Many people simply save through their work via payroll deduction. They may contribute to the company 401(k) plan or other savings vehicles and call it good. Real savers do save through work and save more on their own. They simply move some money to an old fashion savings account, then when that gets to a significant size they invest it in some manner. Savings can be built several different ways. 

Saving money can become a priority. Developing the self discipline to save will be an attribute that will bless you for years to come. Struggling with it is natural, have faith that it can be done! Go do it!! Please let us know how you go about saving money. What are your challenges with saving money - outside of your company retirement plan?

“The Power to make and keep commitments to ourselves is the essence of developing the basic habits of effectiveness.” Stephen R. Covey

Topics: Budget, Saving, money, Emergency Fund

A Way To Become Debt Free With A Spender

Posted by Wendell Brock, MBA, ChFC on Thu, Apr 20, 2017

Financial Arguments

While studying Financial Planning in college one math class referred to a mathematical formula as an argument, something I was not too familiar with. Not completely understanding the topic - the only argument I had was with the professor! Recently I was talking with a friend about personal financial topics, I asked her, “What money topic do you and your spouse argue about most?” Her response, “debt.” She wants to be debt free!

Debt - This husband and wife are the typical middle income American family: both spouses work, two kids, a suburban home, a couple of autos and maybe a pet or two. When debt becomes a real problem the heated argument rises from a simmering two, to at least a six or higher on a scale of one to ten. argument couple.jpg

Why? Simply because he does not show any interest in caring about the family finances. He works and spends what he wants on snacks, tobacco, or other stuff at the gas station. He does not have a serious concern for the future; life is easy.

The problem became really serious when he began using his wife’s credit card for business travel and never turned in the expense report. He did not bother to collect expenses that were due him from his company. She offered to do the paperwork for him and it just did not seem to matter, it was still too much trouble. He has since been laid off and is employed with a new company, and those expenses are now theirs to bare and pay off.

Some people as the saying goes are “wired differently” or perhaps they have a short in their wiring. Either way people can always change, that I am confident of. Money issues are very emotional, thus solving those problems is emotional as well. We think through these financial issues and come up with solutions. Here are a few ideas if the above story sounds a bit like a situation you are familiar with. 

First people have to want to change and typically they change because they see something better or what they are experiencing is so painful that they realize they must change. This change maybe in baby steps, but that is o.k. any positive change is good. If there are a few episodes of back-sliding, claim progress, be patient, and press forward with faith.

Next develop a vision of what could happen if small changes were made. Helping this person see a vision of what the short-term would look like if they made such small changes is most valuable. Set a goal, if we had an extra $1,000 we could go on a small vacation to (pick a place). Talk it up and get them excited about it. Then work on the plan to fund it. 

bigstock-Two-green-street-signs-with-th-22445225.jpgMaybe since both spouses work, the saver could offer to the spender a matching deal: you cut out $50 per week of excess spending and I will match the $50 towards the trip. The spender’s $50 can go on debt and the saver’s $50 can go towards the vacation. 

That is $200 per month each and in five months $1,000has been saved for the trip, and an extra $1000 of debt has been paid off. Next, establish a new vision, set a new goal, make a plan and repeat.

Help the spender understand that debt is a constant - it is something that we may live with all the time, it never sleeps or goes on vacation, and never seems to go away unless something is done about it. In today’s world there are people out there who simply love to spend, keeping them in debt, and they love the feeling of “power” or “entitlement” they have when they pull out the charge card. 

That emotional feeling of power or entitlement can be transferred to a feeling of greater power and strength when there is money in the bank and you don’t have to pull out the charge card. True financial strength is not developed by having a great credit rating; it is developed by having the self-discipline to save money.



 "Your failures are your stepping stones to success" ~Howard Ruff

Topics: Saving, debt free

Start Saving For Retirement Now

Posted by Wendell Brock, MBA, ChFC on Thu, Dec 12, 2013

Americans these days talk a lot about retirement, what they want to do, when they want to retire and where they dream about living. While there are many issues in planning a comfortable retirement, the most important is having enough money.

One fear these days is that a retired person may outlive their money. With people living longer, the 10 year retirement plan that worked for our grandparent’s generation no longer equals security.

To be on the proverbial save side, plan for at least 25 years of retirement. This puts an

Retirement planningthing you can’t afford.
 extra strain on your retirement savings because it not only has to provide you with a decent income, but for a longer period of time. 

There are some things that will help. First, get started right now. Procrastination is one 
In fact, waiting 10 years to start will cost you over two time the savings rate. For example for every $100,000 you wish to have saved by the time you reach 65, it will cost you $28.64 per month at age 25 and $67.10 per month at age 35. You may think that’s no big deal, but at age 45 it will cost you $169.77 per month and it only goes up from there. 

According to the Employee Benefit Research Institute only 39.4 percent of the 156.5 million Americans working participate in an employer sponsored retirement plan. This lack of savings will greatly affect the spending of future retirees.

Second, plan on working at least until you can collect 100 percent of your socia
l security benefits. For those born after 1958 this is age 67. The longer you work, the more social security you will collect on a monthly basis. Working longer, will also allow you to put more away in your retirement plan and let what is there grow.

Third, open a Roth IRA, use a Roth IRA as your primary retirement savings vehicle. (Unless your company matches your contributions in a company sponsored 401K). Between these two you should save a substantial amount of your retirement funds. The big thing is to save regularly, make regular contributions to these accounts. No one forces you to do this, so you must be self-disciplined in your savings and simply DO IT!

If you don’t like that idea, plan on increasing your savings rate. Currently Americans save approximately 4 percent of their income. It should be at least 10 percent, if not 15-20 percent. The more you save now, the less you will have to work during the golden years.

Finally, don’t be afraid to use mutual funds and exchange traded funds (ETF’s). By using an effective portfolio management strategy, like the 7Twelve® portfolio model you can manage risk while at the same time maintain adequate returns. Outside Investment Advisors can assist in implementing this type of model. Using appropriate funds should keep your money growing at a fair rate and keep it ahead of taxes and inflation.

Topics: retirement, Saving, Investment, money, planning


Wendell W. Brock, MBA, ChFC

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