Happy New Year! January is a great month. It holds such promise for the year ahead. And hopefully, at least one of your resolutions is still intact as you read
this. Personally, our resolution to avoid bad puns this year died with the title of this article. Sigh. Oh well, there’s always next year!
Speaking of resolutions though, what financial resolutions were on your list? Save more? Actually look at that budget from time to time, maybe? Let’s talk
about one little change you can make to help improve those saving and spending habits: pay yourself first.
The single most important factor that will determine financial security down the road is how much you are able to save (for those curious, the second most
important factor is time). Seriously though, there is a lot of ink spilled over things like Traditional vs. Roth IRAs and appropriate stock vs. bond allocation, but
it’s all statistically insignificant relative to your ability to save money vs. not.
This is not to say you should live on Ramen noodles and use single-ply toilet paper for the rest of your life! If you’ve been reading these articles for any
length of time, you should know that we feel strongly about balancing saving for the future with the enjoyment current spending can bring.
But when you see that paycheck hit your account, who’s the first person you pay? The credit card company? A car dealership? Student loans? Your
landlord? The bar down the street with the great happy hour? Pay yourself first. Every time. You (and your family) should be the most important thing in your
life, so prioritize yourself. Set up an automatic transfer for 5-10% of your paycheck that goes directly into a savings account (or investment account, if your
emergency fund is in good order).
This does two things for you. First, it rather obviously means you’re saving money, so good job with that. But second, it makes it harder to get caught in a
spending trap. Rather than seeing how much is left at the end of the month to transfer over to savings, even if you spend your account down to zero by the
next paycheck, you already saved what you were supposed to because you paid yourself first. (Credit cards are a rather obvious counterpoint to this argument,
because they let you spend more than you may have, so be careful. Total credit card debt in the US is over $1 trillion now, and while we happen to like credit
cards and appreciate that they can be powerful tools for financial planning - a 2% cash back card automatically reduces your spending by 2%! - make sure
you’re paying them off in full every month.)
So. Start this year off by putting the you back in January. If you haven’t been paying yourself first, start now and see how it feels this year. Start with 5%.
If you already do 5%, bump it up to 10%. See how it feels month-to-month, and then see how it feels in June when you look back on all you’ve managed to
save in the first half of the year. We bet it’ll feel good.
For a little more help with this or any other financial resolution you might have made, feel free to reach out. There’s a lot to this investing/financial planning
thing, and if you ever want more than a monthly article, drop me a line at russ@atiwealthpartners.com and we’ll find some time to get together. I’m looking
forward to it.
TYBEE BEACHCOMBER | JAN 2019 25
Rogue Waves By Russell Robertson, CFP
Jan-YOU-ary
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