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Get the future you want: Make a financial plan – Part 4 Savings

In the previous article of this series, Part 3, we discussed the vital role insurance plays in providing a financial safety net for you and your family in case of emergency. Much as we don’t like to think of accidents or health crises, it’s better to face up to the prospect of them by setting up a solid insurance plan. Such risk management, should an emergency occur, reduces or eliminates your debt (mortgage, credit card, line-of-credit, etc.); also, it replaces your income for your family. In this article, we move on to examine savings strategies.

 

Saving: Intentions are good but strategies are even better

You’ve set your financial goals –the way you want your future to look. You’re starting to put money aside for the future. Now comes the satisfying part. You receive your financial statements. From them, you see in them the savings you’re building, month to month, year to year. 

Those statements are telling you that the future you want is ahead of you – it’s tangible. 

Let’s look at how you are saving. There tend to be two types of savers. Which one do you think is more successful with achieving their financial goals? 

• Person A: spends their paycheque first and then saves whatever is left over at the end.
• Person B saves a little bit first, then spends whatever is left.

If you guessed Person B, you’re right on the money. Taking the attitude of Person A, that it’s open season on every paycheque, won’t result in much savings.

But even if you guessed right with Person B, you’re probably like most of us. You might benefit from some behavioural coaching about money.

This is where a good financial advisor comes in. An advisor keeps you on track, reminding you of your goals and why you are saving. Having a financial advisor for your money is like having a personal trainer for your exercise. You could tackle saving or exercise purely on your own. But your chances of succeeding, of showing positive results, are better with a coach.

 

A financial advisor helps you with savings strategies by:

• Guiding you to a personalized budgeting routine that works for you. Because it takes into account your individual circumstances, needs and wants, a personalized budget means that every month you’ll meet all expenses, all obligations, including the amount you’re setting aside for saving.
• Making sure your money keeps working for you.
• Helping you stay efficient and organized with your money.
• Making sure you have clarity with your savings strategies; that they make sense to you.
• Identifying your short-, mid- and long-term goals.

 

Further to the last point above, each of your goals will have a separate savings strategy. A short-term goal might be the education you wish to complete, or saving for a wedding. A mid-term goal could be buying a house and going on a vacation every year. A long-term goal could be retirement planning. 

Consult your financial advisor about a budgeting routine that works for you. And always keep in mind your short-, mid- and long-term goals! 

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In Part 5 of this series, we’ll discover how investments provide us with a lasting income stream, as opposed to our more temporary income stream of salaries. We’ll learn about the famous Rule of 72 and how it predicts when your investment will double; also the different types of investments open to you, from stocks to mutual funds to Exchange-Traded funds to rentals, and more. Lots to think about coming up, as I write about ways to Invest in your future.