This post is sponsored by Capital One. The post is written by Megan Lathrop – Co-Creator of the Money Coaching Program at Capital One and a Certified Money Coach.
Saving for retirement can feel overwhelming – when to start, where to start, how to start? One thing is certain – if it feels like you’re about to jump on a treadmill that’s already moving, you may have already convinced yourself you’ll never catch up. Yet, now more than ever, Americans are responsible for their own long-term financial security.
My advice: think of the process like physical fitness. Whether saving for the future means saving for a car in a few years, or retirement decades away, consider it an exercise in imagining your future self and get yourself fit for the future you aspire to. The longer you put it off, the harder it gets – and the more likely you are to leave yourself vulnerable.
While two-thirds of Americans are confident in their financial future, many have a long way to go – just half say they have a long-term financial plan, according to Capital One’s 2018 Financial Freedom Survey.
Among non-retirees, nearly 20% don’t expect to or know if they’ll ever retire.
The good news is, you don’t have to start with a grand plan. Starting with small actions can add up to good habits that pay off over time. Focus on what feels right for you rather than comparing yourself to your neighbor or some financial benchmark.
When I talk to people as a Capital One Money Coach, I invite them to explore where they see themselves in two years, five years and even decades out – both in their financial life and their personal life. When you can see clearly what’s important to you as a person, it makes financial moves that much easier because they’re squarely aligned with your values.
Make These 5 Small Moves to Reach Your Retirement Dreams
With all of that in mind, and in honor of Financial Literacy month in April, we’ve put together five tips for making small moves that really add up:
Start small – at any age and any stage.
It’s never too little, and it’s never too late – even if it’s a few dollars a month when you’re 65 and still working or 25 and just starting your career.
According to the Financial Freedom Survey, Forty-one percent of non-retirees who aren’t saving for retirement say they don’t think they earn enough to save sufficiently. Try putting away $20 a month through automatic transfer from your paycheck to savings account. Small amounts add up over time.
So, it’s much easier to make incremental adjustments instead of trying to save up a thousand dollars all at once to stuff into your savings once or twice a year.
Make the most of your checking and savings.
As you start automatically transferring small amounts into your savings account, try to choose a high-yield savings with no minimum balance. That way, you’re making the most of your savings without losing access in case of emergency.
Free checking accounts were once ubiquitous but you may have noticed your bank has started to charge you fees in your checking account. Be sure to stay on top of any mysterious fees or consider a fee-free, no minimum balance account like Capital One’s 360 Checking.
Create the vision, literally.
Whether it is a place you want to live in retirement, a boat you want to buy or a foreign destination on your bucket list, having a specific goal for a portion of your savings will give you clarity and help you focus on the goal.
Having an image of something you’re saving for can be inspiring and help give you discipline – set up a Pinterest board, or change the name of your Savings account to “Dream vacation.” Specifying something concrete that you’re saving for and seeing reminders of it will help you more effectively reach a goal.
Even creating a vision board or computer wallpaper has been proven to be quite motivational.
Develop a reward system.
The power of decision-making helps us realize that every choice we make shapes our lives.
Most of us – 88%, according to Capital One’s Financial Freedom survey – are willing to make sacrifices to save more and improve our financial health, whether it’s dining out less or deferring a big-ticket purchase. And younger Americans are most willing to give up these luxuries. To encourage saving behavior, treat yourself occasionally when you have hit a small goal.
If you’ve brown-bagged your lunch 10 days in a row, reward yourself with a small expenditure on something that matters to you.
Live in the “yes.”
Every purchase or expenditure becomes a tradeoff. When we say “yes” to spending on something, we don’t always acknowledge it but we are saying no to something else.
The trick is to be conscious of the tradeoffs you’re making and what your priorities are. Just like those “jar of life” inspirational videos, putting the things that are most important to you first let’s everything else fit. That’s living in the “yes.”
Megan Lathrop is Co-Creator of the Money Coaching Program at Capital One and a Certified Money Coach. This article is for educational purposes. The material provided in this article is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.
Allan Liwanag is a personal finance blogger who paid off at least $40K debt in 3 years by adopting simple and extreme saving techniques while ensuring his family’s needs were taken care of. An analyst by day and dedicated blogger by night, he loves to share his thoughts – based on his research, personal knowledge, and experience – on topics related to family, life, and money. Allan lives with his family in Maryland, USA.