Maurice E. Miller Jr., wealth management advisor.
Money makes the world go ‘round, but a lack of it may cause plans to halt. Now that families and individuals are on the other side of the pandemic, many are looking for ways to increase, replenish or start a savings account. However, certain money measures could be preventing many from reaching their financial goals. Learning to reshape spending and saving behaviors could mean the difference between financial stability and ruin.
Maurice E. Miller Jr., wealth management advisor and a Certified Financial Planner at MassMutual Great Lakes, assists many in helping to realize their financial goals. However, money misconceptions can keep potential savers from starting to save.
“The biggest mistake is simply not starting. Far too many people think they need a lot of money to start, and the most important thing is to form the habit and increase your savings over time,” said Miller.
Advisors believe the key to savings is to create healthy financial behaviors that will allow money saving to become second nature. Filtering money from one source of payment to a savings account is one of the top ways to help create a nest egg without hassle.
“The second mistake I also see is not automating your savings with your bank. Make it happen where you do not have to think about it. One way would be to do it as a payroll deduction, where you send some money to a dedicated savings account each time you are paid. If your employer will not allow you, or you are self-employed, most banks will allow you to automatically move money from a checking account to a savings account on specific dates.”
The best money saving behaviors may not be able to assist families and individuals who are in financial turmoil. Yet, it may be easy to turn the tide and create opportunities to mitigate costs and reduce the amount of dollars being spend. A deep review of personal expenses will allow savers to investigate which areas of their spending is being wasted and how to revamp those costs.
“The easiest way to give yourself a raise is to reduce your expenses. I think if someone is in a fiscal crisis, they first want to review where they are currently spending to see if they can reduce those items,” said Miller. “It could be a combination of exploring switching cell phone carriers or internet providers; are there streaming services that you are paying for and not utilizing; that dreaded gym membership that is not being used or working with an insurance broker to explore if there are some savings associated with a different auto or homeowner’s insurance provider.”
Eliminating wasteful spending is not the only way to increase funds. The pandemic allowed for the discovery of many odd jobs used to bring in extra funds. Alternatively, maximizing current job opportunities could also lead to increases in cash flow.
“Another route is to consider how you can increase your income. Working with an accountant to ensure you have the most tax efficient strategy — there could be dollars left on the table that could go back into your pocket,” said Miller. Consider how you may be able to monetize hobbies and making sure you are communicating with your employer on potential advancements or promotions.
While many may have specific goals for saving for items such as the purchase of a home or car, some want to simply save for a rainy day. No matter the intended outcome, choosing an attainable amount is the name of the game.
“Outside of specific savings goals, we want to try and have a balance between an amount that is meaningful, yet achievable. For instance, $1,000 per month will be meaningful for most people, but it may not be achievable,” said Miller. “Ideally, we want to start with 10 percent of your income and increase that over time. From experience, those who can work their way towards 20 to 30 percent of their income often find themselves with more flexibility in the future, but just as we said before, start where you are and don’t despise what you may consider small beginnings.”
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