After recently completing my second half-marathon race in October, I’m mulling my new fitness goals for 2020. At the very least, I’m considering running the same two races as I did in 2019 with the goal of beating my previous time on both courses.
I enjoy setting New Year’s resolutions; it’s a time to get a fresh start not only for the year, but in this case, for an entire decade. Like most people, I also have financial goals for 2020. Through trial and error over the past several years, I’ve found three strategies that have helped my corporate executive and professional clients save money.
I know that the experts are always touting new ways to save in the new year — but these have really worked for me and my family. I’m confident that even choosing one of the three will help you find your financial footing in 2020:
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Forget Budgets – Here’s How to Track Every Dollar Spent.
It’s no surprise that many executives don’t know how they spend all their money. As retirement approaches, most want to know how much they spend for essential needs compared to discretionary items. Making this distinction helps them gauge their ability to retire and the quality of their retirement lifestyle.
One client who wanted to know these answers recently started going through his credit card statements. Before he knew it, his entire weekend was spent combing through months of statements attempting to categorize and spreadsheet his expenses in a post-mortem manner. There is a better way to understand how your money is spent.
Instead of setting a traditional budget, my wife and I create a spreadsheet and a Google Docs form to quickly capture and categorize each purchase in real time from our smartphones. Each transaction takes less than 20 seconds to record. It’s easy to create a Google Sheets file and link it to a Form where you can input your purchases.
Once the data automatically syncs to the spreadsheet, I’m able to sort and analyze it. At the end of each month, my wife and I review how the family money is spent and discuss any changes needed. The simple act of tracking every purchase makes all of us more mindful of our spending and helps avoid impulse purchases.
Automate Savings and Giving.
Prioritize what matters most by automating it. For many years, my wife and I attempted to save and give money to our favorite charities from money left in our accounts at the end of each month. Not surprisingly, there was seldom much money left.
After being disappointed by our lack of progress, we decided to save and make charitable donations before spending. Our charitable giving is automatically deducted on payday, and the amount remaining in the checking account on payday is used to run our household.
We no longer have to worry about capturing any leftovers. Money for our 401(k) retirement savings plan and Health Savings Account (HSA) contributions is taken out of my paycheck. And we’ve set up semi-monthly sweeps of set amounts into vacation and savings accounts for gifts.
All of the money left in our checking account gives us a guilt-free way to spend as we wish because we’ve already done what matters most. After using this method for the past two years, we’ve saved more than we thought we could and more than doubled our prior annual charitable contributions! We didn’t have a shortage of funds before; we just didn’t prioritize our spending properly.
Set Clear Goals.
Retirement is a huge goal, and the amount of money needed to prepare for retirement is equally massive. In my experience, many executives get sticker shock upon seeing how much they need to save for retirement; they can easily become paralyzed instead of motivated.
I’ve helped some clients overcome this obstacle by focusing on bite-sized pieces instead of the entire picture. One couple I advise has substantial income, but very expensive hobbies as well. Instead of telling them to cut out these hobbies, I helped them quantify how much they need to save specifically in this calendar year to be on track to retire at age 60.
In January 2019, we met and I made clear they needed to save $20,000 this year in addition to them both contributing the maximum amount to their 401(k) retirement plans. I was pleasantly surprised to learn from them in October that not only had they already saved the $20,000 for the calendar year, but they planned to sock away even more before year’s end. A specific plan helped bring them clarity and motivation.
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Donating Complex Assets Doesn't Have to Be ComplicatedIf you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
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Travel trends you can expect this summerThe Kiplinger Letter Domestic trips will trump foreign travel amid economic uncertainties, though some costs are down.
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Donating Complex Assets Doesn't Have to Be Complicated
If you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
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Think a Repeal of the Estate Tax Wouldn't Affect You? WrongThe wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
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In Your 50s? We Need to Talk About Long-Term CareMany people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
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Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
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Such Attractive Yields in High-Grade Munis Are Rare and May Not Last LongAccording to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
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Financial Analyst Sees a Bright Present for Municipal Bond InvestorsHigh-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.
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I'm an Insurance Pro: How Not to Get Dumped by Your Insurance AgentYour insurance agent or broker might show you the door if you do any of these five things. Being a good customer is about more than paying your bill on time.
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Two Estate Planning Issues You Should Never OverlookThis estate planning attorney explains why proper asset titling and beneficiary designations make a big difference when it's time to transfer your wealth.
