Advice That Never Grows Old

“The truth is that most of our current wealth is the result of diligent savings, not high returns.”

These words came from Lana Wong in an interview for MoneySense’ Guide to Retiring Wealthy.  “Save diligently” is advice which never grows old. 

Some things stick like glue.  Things you read or things people say become embedded in your memory.  Once in a while they mystically reappear.     

I remembered snippets from this publication, “How I planned my way to financial freedom”. When I found the book, June 19th, 2011, was scribbled at the bottom of the article’s last page.  At the top, I had written “very good, recommend”. 

The reason this article came to mind now is directly related to a financial plan I am currently creating for a couple. Everything Lana said in her interview applies to my couple’s situation.    My clients didn’t chase high returns.  They were following the same route directed by Lana.

Lana said, “All I did was make sure to take advantage of any pension plans or savings plans that my employers offered. I also maxed out my RRSP contributions every year.”   This works!  Lana said it did. I have seen the same results in my clients’ financial projections who diligently saved and minimized their debt over the years.  Now they are able to comfortably retire in their late fifties.   

There are many smart people, like Lana and her husband, Randy, who apply what they know they should do at a young age.  They follow through with their own advice.

Lana’s wisdom is profound. “My biggest motivation wasn’t becoming rich.  No, I started saving money because I was lazy.” 

When we recognize our weaknesses, we can take control of getting the ball rolling in the right direction.  Lana knew she had a war to fight against her weakness.  She developed a battle plan.  That was to simply start saving. 

She goes on to say, “I realized that if I saved just $50 a week when I was in my 20’s, then I’d never have to worry about money later on.  I figured I might even be able to retire early.”

Lana wasn’t sure she could retire early…she only thought she “might” be able to.   “Might” has a way of deterring many people.  When we are not entirely certain, reluctance fights against our best intentions.  We simply give up. “What’s the use! I can’t save… I just blow it.”  

We do ourselves a favor when we heed Lana and Randy’s advice.  They learned three important lessons which they willingly shared in the interview.

• Set goals.
• Always live below our means.
• Train ourselves to be happy with what we have instead of always wanting more. 

I feel a personal connection to Lana.   She grew up in Moose Jaw, attended the University of Saskatchewan, and worked for a consulting company in Regina before moving to Vancouver when she was 31 years old.   You are not reading “How I planned my way to financial freedom” from a textbook on personal finances.  This story is personal. And personal stories are relatable.   By sharing Lana and Randy’s never-grow-old advice, I hope you will be motivated to create your own happily ever after retirement story. {To read the full article, click here.}

Keeping Christmas in Perspective

The all-too-familiar question, “Are you ready,” is often asked as Christmas approaches.  As you prepare to answer, you mentally roll through the tasks on your long to-do list.  Doing all that’s required on your list is one way to get ready for Christmas but the other way is preparing yourself for the cost.  Christmas, for most people, can come with a high price tag, higher than some anticipate or would like.  The challenge is to set a realistic budget.  A memorable Christmas doesn’t have to be expensive unless you choose it to be.  Somehow in the hype of the season, you may lose focus of your dream list.  Think about it.  If you want a winter vacation, you want to ensure you don’t blow your entire savings on Christmas.  

My friend, Marilyn, is so wise.  She has always faithfully saved for Christmas.  A set amount is transferred every payday to an account called “Christmas Savings”; so when Christmas arrives, she enjoys the holidays financially stress-free because she is prepared for the cost.  When you stop to think about expenses associated with the festive holiday, the list is long.  There’s the  Christmas tree with its decorations and lights, the turkey dinner with all the fixings and, of course, there are the gifts.   Don’t forget the new Christmas outfits for your family and you.  Goodness, what would Christmas be without a variety of baking, chocolates and nuts? Your list may also include travel costs.  Lastly, your generous donation to the foodbank ensures others enjoy Christmas too.

Saving and spending should be coordinated smartly.  Saving with the intention to spend the money on a special occasion like Christmas is a smart strategy which requires honesty. First, you need to be honest with yourself. How much can you realistically spend when you consider all your financial obligations, loan payments, living expenses, and other reasons for savings, retirement or children’s education?  Second, you need to be honest with others, your family and friends.  Too often, you may feel pressured to spend more on Christmas gifts than what you can afford or even what you want. 

Everyone’s perspective on Christmas is entirely different.  Some enjoy lavishly spoiling loved ones with gifts because they can while others prefer to celebrate with a greater emphasis on the time spent together with family and friends.  However you spend this joyous season, you want a Christmas which is memorable and enjoyable without the burden of wondering how you will pay for it. Christmas was never intended to be burdensome. 

As you complete those final touches in preparation for this important holiday, take a moment to reflect on your feelings. If you have managed your Christmas on a realistic budget, congratulate yourself.  If you need to promise yourself that next year you will do better, then create a plan.  There isn’t a better time to make a promise than at the start of a new year.  

Merry Christmas!

Baby Steps Towards Saving

 

Do you have difficulty saving money? Saving is not easy for everyone.  Some people are savers while others are spenders.  Understanding which one you are is important. Not being in the habit of saving may be an obstacle standing in the way of having what you want. If saving is the last thing you do, or try to do after your money is spent, then something is not working.  That something has to change.

The "One Less" Rule

I now realize setting up regular savings on a weekly basis works the best.  It is easier to see where expenses can be reduced in order to increase savings.

One less “something” can make a difference. One less . . .  

• Coffee and muffin

• Meal in a restaurant

• ­­­­­­­­__________________ (you fill in the blank)

You can quickly visualize the extra $5, $10, or $25 deposited to your savings. Refraining from buying the container of ice cream or opting to take lunch to work rather than going out, will ensure the money finds its way into your savings account.  Avoiding the usual purchases, the cup of coffee on the way to the office or the magazine in the check-out aisle, will help in your attempt to save. Even cancelling a shopping trip to your favorite store will avoid the possibility of you spending more than you want. In the end, it’s the day-to-day little things you do (or rather not do) that can save you.

To get into the rhythm of saving, you can devise an exercise of “multiplying” your progress.  You can simply start small and work your way up to your saving target. Starting small is the best approach. The exercise will get more difficult as the amount increases.

The chart below shows beginning with $1 a day for the first week, increasing this to $2 per day for the second week and $3 for third week. See the trend. Finally at Week 7, you will be saving $49/week.  Keep these strategies going until you reach your target.  If your ultimate plan is to save $100 per week, you need to discover ways to spend $15 less per day.   The amazing part is not spending money on any given day is a way of saving.    In reality it’s this momentum which helps overcome the barrier to saving that you encountered in the first place.

My Personal Savings Plan
Week	Days of the Week							Total
	S	M	T	W	T	F	S
#1	$1	$1	$1	$1	$1	$1	$1	$ 7
#2	$2	$2	$2	$2	$2	$2	$2	$14
#3	$3	$3	$3	$3	$3	$3	$3	$21
#4	$4	$4	$4	$4	$4	$4	$4	$28
#5	$5	$5	$5	$5	$5	$5	$5	$35
#6	$6	$6	$6	$6	$6	$6	$6	$42
#7	$7	$7	$7	$7	$7	$7	$7	$49

 

Letters of Encouragement

Good things start with something small. A tiny sunflower seed grows into an enormous plant. Small snowballs roll into gigantic snowmen. Your savings will build to a hefty amount.  You need to incorporate patience into the savings plan.

P – Positive attitude propels you; you can do this!

A – Anticipate the end result to show where you are going.

T - Tolerance towards mistakes tests your commitment.

I – Intent drives your actions.

E - Effort pays off.

N – Need to stay focused keeps you on track.

C – Commitment sustains you.

E – Excitement motivates you to keep on “keeping on.”

Please share ways you discovered savings to be easy for you.  Other people certainly may benefit from your strategies.