Regardless of your financial situation, if you’re not honest with yourself about your finances, you may compromise your financial success and peace of mind. People often struggle to successfully manage money because they lack honesty about their spending and saving habits. Read on to learn about four of the most common excuses people use to justify their inability to successfully manage finances. If you have used any of these excuses, it’s time to take a serious look at your financial reality.
I Don’t Have Enough Experience Or Money To Invest
According to a recent Gallup poll, only 37% of Americans under the age of 35 invested in stocks between 2017 and 2018, while 61% of people older than 35 did invest. Most who aren’t investing feel they don’t have the requisite knowledge to invest, the money to get stared or both.
The reality is, you are not required to be a personal finance expert or affluent to enjoy the long-term benefits of investing. Begin investing with a 401K, low-risk mutual funds or even a robo advisor. Robo advisors were created to make investing simple and easy. All three of these investment options offer ways to begin with less than $100 a month.
I Have Plenty Of Time To Save For Retirement
It’s easy to believe there is plenty of time to begin saving. Life is busy and retirement is a long way away. It is often challenging to discipline yourself in the present for the benefit of your future self.
Time, however, is the single most useful tool for growing savings.
The earlier you start saving, the less money you’ll need to set aside monthly. $100 saved monthly beginning at age 25 could grow into almost $350,000 by 67. Delaying when you start by 10 years (age 35) reduces your growth by more than half to about $135,000. To see how monthly savings might grow, check out this investment calculating tool.
Saving for retirement is important at every age. The sooner you begin, the greater the benefits.
I Can Afford My Lifestyle Spending
Most people are highly skilled at rationalizing. Perhaps you think you need trendy clothes to look good at work, to lease a luxury car you could not otherwise afford, or to justify eating out to save time grocery shopping and cooking. If any of these thoughts have crossed your mind, you may consider re-evaluating your spending mindset.
Not being honest with yourself about what you’re spending may feel good in the moment, but the appeal of purchases frequently wears off.
Stop making excuses for what you spend and start asking yourself how these purchases will affect your life. Is this something you really need? Will this help you accomplish your career and financial goals? How much will you have to work to afford the purchase? If you answer no to the first two questions and feel uncomfortable answering the third, this is a purchase you should probably avoid.
I’m Going To Start Keeping A Budget
The road to following a budget truly is paved with good intentions. A traditional budget requires you to track spending that has already happened. This format often fails for many; it does not provide forward-looking information and it can prove incredibly tedious to track every dollar.
Instead of a traditional budget, use a spending plan with categories. Set aside a certain percentage of your income for:
• Fixed costs (rent, utilities, groceries, etc.)
• Investing (401K, Roth IRA, etc.)
• Discretionary spending (shopping, dining out, etc)
• Savings (vacations & other high dollar spends)
Allocating your income into these categories will aid your ability to keep spending in check. A spending plan is a road map you can use, regardless of income, to achieve your goals without the need to track every penny.
It’s important to remember you are in control of your finances. The sooner you take an honest look at how you manage your money the less likely you are to sacrifice your future financial health.
Call To Action
Do you think my tips were helpful in re-directing your focus and goals? Please share the article and shout out to me on Twitter!
You can also check out my firm LexION Capital for more tips on how to grow your wealth and become financially secure.
Elle Kaplan is the founder and CEO of LexION Capital, a fiduciary wealth management firm in New York City, serving high-net-worth individuals. She is also the chief investment officer and founder of LexION Alpha.
Originally published on Medium.
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