In our heads, we know what it takes to live from one paycheck to the next. But do we really want to limit ourselves to that forever? What about savings? Retirement? For a while, those words weren’t even in my (Taylor) vocabulary. Thank God for a woman though, right? Megan really led me in the right direction — which, looking back, I’m so thankful for.
Here are 5 things you can start doing today to pave the way for a financially secure life and get out of those “paycheck to paycheck” habits.
1. Put down the coffee
A recent report estimates that the average American worker spends $14.40 a week on coffee…that’s around $1,100 a year. If you brewed it at home and put that money into a retirement savings vehicle, over a 30 year period that could mean as much as $500 extra dollars a month.
Is $500 dollars a month enough to live on? NO, but it sure adds up!
2. Priorities can make you prosperous
According to Webster, the definition of a priority is this: The fact or condition of being regarded or treated as more important.
You take action based on your priorities. Just saying “saving for retirement is important” is one thing, but then reality sets in. Many people wimp out before they even try. They are afraid of the tough choices, and the result is no retirement savings.
If retirement savings isn’t a priority, then it doesn’t matter how much money you have…your retirement will never be funded. Skip on the new pair of shoes, watch the movie at home instead of the theater, have your romantic dinner at home instead of the expensive restaurant – it all adds up over time. No tough choices equal no retirement savings.
3. Say yes to the “free money”
About 75% of companies offering 401(k) retirement plans offer some type of a matching program, generally based on an employee’s contributions capped at a percentage of their salary. For example, a 401(k) matching policy may be “50% of employee contributions, up to 6% of total compensation.” In other words, if you earn $50,000 per year and contribute $3,000 to your 401(k) — 6% of your salary — your employer will contribute an additional $1,500 on your behalf. That’s $1,500 of free money! Missing out on this is just plain silly.
Research shows about one in five participants doesn’t contribute enough to take full advantage of their employer match.
Make a commitment to take advantage of the full match. It adds up over time.
4. Vision for the future
If you don’t know where you are going…how are you going to get there? Same thing with planning for retirement. Get excited about saving for the future and it will happen. Envisioning how you’re going to live? Imagining what you will be doing with your time? Foresee what it will be like to have enough money so you can play with your grandkids at any time. Having a clear vision for your future will motivate you to save.
5. Two is better than one
If you aren’t on the same page as your spouse, a complete nest egg will likely never happen. Fights about money are some of the most wounding fights. Often, to avoid a fight, we just stick our heads in the sand and ignore the subject.
The American Society of Training and Development (ASTD) did a study on accountability and found that you have a 65% chance of completing a goal if you commit to someone. And if you have a specific accountability appointment with a person you’ve committed to, you will increase your chance of success by up to 95%.
In essence, commit to your retirement savings together.
Sit down with your spouse, make planning for your future a priority, and make the decisions on what you will cut to make it happen. Planning for your future together gives you a common goal, excitement, and peace. Not only will your nest egg grow…your love for each other will too.
Do you have any tips on how to stop living paycheck to paycheck? What worked for you and your spouse? Let us know!
Taylor & Megan Kovar
Pick up a copy of our new book, The 5 Money Personalities: Speaking The Same Love & Money Language on our website!