Get ready to buckle your seat belt, because I’m about to give you an insight that’s going to rock your world. Here it is: Sometimes to fix a problem, you have to become aware of it. Okay, so maybe not the most earthshattering concept, but hear me out. Sometimes we are oblivious to an issue, so it makes sense that we have to become aware of a problem before we can fix it.
An awareness situation presented itself just the other day when someone came to me very worried about their finances and savings. This retiree was concerned that his expenses were far greater than anticipated and he was fearful that his retirement funds would run out much sooner than planned. He was aware of an issue and did the right thing by taking action and seeking help.
It soon became clear that the best way to help this person would be by making him even more aware. We started by assigning a little homework project designed to do just that. We asked him to track his monthly expenses in writing over the next month. Basically, we were going to help him create a budget and become more aware of how he was spending his money.
Since he was genuinely concerned about his expenses we made one other request; we asked him to try and not use any credit cards during the tracking period if possible. Less than two weeks into the assignment I received a phone call thanking me. This was the first time he had done an exercise like this and it was teaching him some very important lessons. The first realization he had was that he had much more control in fixing the problem than he thought. The other revelation was that he used his credit cards way more than he imagined because it’s so easy to use.
In other words, the credit cards were so easy to use but when he forced himself to pay cash the expense became very real. Credit cards have a way of devaluing money, it’s so easy to swipe and go that we sometimes forget the amount of money that’s flowing out of our hands. When you make yourself pay in cash you start to think a little more about the purchase. It’s becomes a little harder to hand over a one-hundred dollar bill than it is to just swipe that piece of plastic.
Think about it. There’s a reason why casinos exchange your cash for chips. They don’t want you to see all of your hard earned money lying around on the table, it works much better for them if you just toss around some nicely colored, harmless chips. Now this article isn’t anti credit cards or gambling, it’s about awareness. Understanding your investment portfolio is only part of the equation, it’s also really important to understand how you are spending your money. A proper retirement plan should incorporate both income and expenses so you can have a more accurate picture of how long your money will last.
A qualified financial professional can help create a plan for you that encompasses your revenue and expenses while maximizing your savings. You’ll have a much better chance to be successful in retirement if you have a strategy for both. Many financial professionals offer complimentary meetings where you can discuss the goals or concerns you have regarding your retirement plan and savings. Remember, you have more control than you think in determining the outcome of your retirement. Now is the perfect time to go from awareness to action and schedule a meeting with a qualified financial professional.