Willpower is Way Overrated

By February 11, 2015Financial Planning

When it comes to saving and investing money, many times we are our worst enemy. Successful people learn to rely on good systems and processes to achieve their goals, not willpower. Life hits us from all directions so it is hard to be consistently “good” in the way we spend, save, and invest. Willpower is way overrated. Autopilot is the way to go!

My thoughts:

  1. Consider whatever money you place in your checking account as already gone. In most cases we are kidding ourselves if we think we can accumulate savings in anything but a separate savings account. Make sure you “detach” your savings account from your checking or you run the risk of draining it in overdraft protection. Better yet, put your savings at a separate bank or credit union with no online transfer capabilities. Finally, deposit money automatically into your savings account every month.

  2. Your Retirement Plan is the backbone of your personal financial success. College for kids, second homes, life insurance, and other investments branch out from your retirement plan like limbs. Maintain the integrity of your backbone by investing automatically a certain percentage from every paycheck. NEVER take a loan against your 401(k) Plan (I know that is a strong statement, but I cannot recall ever recommending a 401(k) loan to anyone in twenty years).

  3. Any debt you want to retire should be set up on an automatic bill-pay or payment plan. If you want to pay your mortgage off early, increase the payment amount and have it deducted from your checking account automatically. Do the same for credit card payments. Acknowledge there are many things tugging at your accumulated savings or end of year bonus so do not rely on them for debt retirement.

Once you have decided on a good financial course, why should you have to re-decide every payday? These tips help you make the right decision once. Life is hectic, messy, and unpredictable so the best way to insure consistent progress towards your financial goals is to automate as much as possible.

 


R
ob Schulz