I can keep track of this year’s AKC beagle field trial schedule, but this may be a shocker: I’m typically oblivious to most holidays, including St. Patrick’s Day. A few years ago, I walked into the office, and my colleague pinched me. It hurt! She started laughing and said, “That’ll teach you for not wearing green!” After getting pinched, I started looking for a pot of gold. Unfortunately, I never found one. So, let’s discuss how to create your own pot of gold!
Finding the Pot of Gold
There are various “pots of gold” ranging from hitting the jackpot on the Vegas slot machine or winning the Powerball. The last I recall, the published odds of winning the Powerball are about 1 in 300 million. Instead of hoping to find a pot of gold, I’ve been working toward building my own. Here is how I go about doing that:
- Create a Financial Plan: This plan is going to quantify how much you need to save for each of your financial goals and will outline what investment strategy is prudent for each goal. For example, Susie and I want to retire in our 60s, so our investment strategy is going to be more aggressive than our goal of saving for our daughter’s college. Our daughter’s education needs are more near-term and warrant a slightly less aggressive strategy.
- Develop a Budget: Notice that the financial plan is developed prior to creating a budget. We’ve outlined our goals; now we are developing a budget to help us meet those objectives. If you are unable to create a balanced budget, you may need to adjust your goals or timelines.
- Monitor your Plan: It is imperative that you continue to monitor your plan. Have you experienced any changes to your income or your goals? Make the necessary changes to your financial plan and adjust your budget accordingly.
Automation Can Help You
Automation and artificial intelligence have dominated the news recently. A common theme among most of my clients is that they have built their wealth through budgeting and saving. The most typical approach is to establish an automated savings system. It’s like putting your savings on autopilot. 401(k)s can be an extremely useful savings vehicle because your savings are pulled directly from your paycheck every pay period. If you do not qualify for a 401(k), you can set up auto savings from your checking account into a Roth IRA or traditional IRA. If you are lucky enough to receive a raise or bonus, enjoy some of it. But ideally, every time you receive a raise or bonus, use it as an opportunity to increase your savings for the year, and don’t forget to update your financial plan to account for the increased savings.
Seeing the positive impact of increased savings in your financial plan helps reassure me I’m making strong financial decisions for my future.
