"Set It and Forget It" Approach to Savings for Busy Families
By Todd I. Youngdahl, CFP®
If balancing family responsibilities with work and other obligations feels overwhelming, you’re not alone. Perhaps you’re tasked with caring for your aging parents, volunteering in your community, or helping your children find safe social outlets. Not to mention, your to-do list includes grocery shopping, house cleaning, and making sure everyone is fed. But what about the finances of a busy family?
With more commitments on your plate than ever (and with young ones underfoot as schools ever so slowly return to normal), it’s understandable if your “budgeting” currently consists of simply making sure there’s money in the checking account and bills are paid on time. But if you’re not consistently saving, you’re probably not on track to meet your personal financial goals.
We’re not here to add yet another item to your to-do list. Instead, we want to share with you our “Set It & Forget It” approach to family savings plans.
Perhaps your current savings method looks something like this: you get your paycheck, pay your bills, buy groceries and other necessities, and then plan to save whatever is left over at the end of the month. What typically happens with this approach is you end up overspending on unnecessary expenses, like eating out too many times or purchasing extra clothes on a shopping trip. At the end of the month, there may be little to nothing left to save.
There is a better way to help you stay on track with your savings goals: the Pay-Yourself-First method. Paying yourself first means that when you get a paycheck, you transfer money to various accounts before spending on anything else. The best part is, you’re not limited to just transferring to a savings account. You could also pay yourself first by transferring money to:
- An investment account
- A retirement account
- A debt payment
- A 529 plan
Of course, you need to understand your budget and know how much money you really need to pay the bills and purchase actual necessities to maximize this strategy. Once you have a good understanding of your budget, you’ll begin to realize just how much you may be able to save when that money is no longer visible in your checking account.
Once you know how much you can save by paying yourself first, make the process of saving easy by automating the transfers to those savings (or retirement, or investment, or credit card) accounts. By setting up an automatic transfer to occur every date you get paid, you won’t notice the money leaving your checking account. Over time, you won’t even miss it.
You may set up automatic transfers to multiple accounts, so you slowly build toward several financial goals at a time. For example, you might want to build up your cash reserve in an online high-yield savings account, while also putting a small amount of money each month into your child’s 529 plan. Whatever you’re saving for, automating your savings will keep you accountable to those goals and lessen the temptation to stray off the path.
Be certain to review your savings plan frequently to take advantage of any increases in pay, bonuses, etc. You may be able to gradually increase your automated savings over time to keep up with your goals.
You’re busy, and personal finance is one of those things that can be delegated. Whether you like to take a hands-off approach or be involved in every single decision, our team at Washington Wealth Advisors can help you sift through the avalanche of choices and opportunities available to you. We can assist you in making the decisions that ultimately help you reach your goals. To get started, call our office at 703.584.2700, book an introductory consultation online or email firstname.lastname@example.org.
Important WASHINGTON WEALTH ADVISORS DISCLOSURES Information
Washington Wealth Advisors is a fee-only registered investment advisory firm serving busy families, executives, women building wealth, and small business owners. We provide Wealth Advisory Services—financial planning coupled with asset management—guided by a personalized investment strategy based on each client’s unique goals. Our unbiased advice, independent approach, and proactive investment management help to support our clients’ overall financial peace of mind.