Why Automatic Savings Plans Create Financial Confidence

By
Mark Nicolet, CFP®, MBA, ABFP™
February 1, 2019
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With a long weekend with my sons and my wife out of state for a reunion with friends, we found our way to Home Depot, the library, a car wash, and of course, a local pizza parlor. These small, but meaningful experiences for our boys’ weekend left me appreciating why a commitment to an automatic, monthly savings plan provides clarity and confidence within our day-to-day lives. We ventured out as my wife enjoyed the time with her friends, knowing we had already committed to saving a determined dollar amount, prior to the decisions of this weekend, this week, and this month. Some months naturally are more expensive than others, and outside of December, it’s hard to anticipate which month(s) will squeeze you. So, this confidence can be had when you have ALREADY settled on your 401k contribution, Roth IRA contribution, your non-retirement investment account contribution, your 529 plan contribution, your insurance contribution, and other vehicles you may be using to save for your priorities. There are a lot of options, but when accounts are being funded, the money isn’t available to spend, and you are taking advantage of dollar-cost averaging.

Once in place, what’s left to spend, is up to you. You will still need to manage the groceries, gas, and other (Target, of course), but I’m confident that you can live the life you want to live, spend intentionally, and still remain on course for future financial independence. More income creates more options, yet the behavior of savings is for everyone. If you have a structure, you can make incremental changes as income increases and priorities change. Eventually, you will have worked towards saving 15%, then 20%, and then 30%. It’s easier to retire when you are comfortable when living off of $.70 of every dollar. As a Decision Coach, I help families navigate how to best allocate their income on a monthly, quarterly, and annual basis through consistent and intentional communication. This provides an immense amount of clarity when your future priorities are already being saved for, especially when my boys want to grab ice cream on the way home, and I have no hesitation in saying, “Yes.” Please contact me at mark.nicolet@trilogyfs.com if you are interested in discussing your personal situation.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk, including the risk of loss. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.

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David McDonough
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Awareness is key to change, but you also need action. In fact, you need focused, decisive and immediate action to see change and to get yourself back on the road to financial independence.

There are a lot of decisions to make when forging your way to financial independence, there are also countless paths to each destination and countless solutions to each problem. Most folks are also juggling more than one financial goal: retirement, emergency funds, college education for children. How do you prioritize? How do you find the right solution for retirement or long-term care? All the decisions can be overwhelming, which causes many to check out of their own financial situation. While taking a step back when one feels overwhelmed is a natural response, refraining from taking action can ultimately do more harm than good.

Definitive action can both propel you towards financial independence and protect the traction you’ve already made. The sooner you start investing in your financial future, the more your funds can grow due to compound interest. The longer you wait to address any financial problems, the more these minor issues can snowball into larger issues, which can often be the case with debt. Also, if you haven’t taken decisive action to establish an emergency fund or invest in the proper form of insurance, an unexpected event can derail you further from your route to financial independence.

Our Advisors at Trilogy try to help you take the guesswork out of making a decision. Some of the worst indecision is born from not knowing the results of choosing Option A over Option B. However, our Advisors /Life Planners can run various scenarios for you, showing the consequences of different courses of action – helping you see which decision may be the right one for you. More importantly, they are here to support you through difficult situations, so the rest of your road to financial independence will be smooth sailing.

By Trilogy Financial
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