Breaking Down your Barriers to Savings February 11 th, 2015 Erica Abbott Financial Planning for...

Breaking Down your Barriers Breaking Down your Barriers

to to SavingsSavingsFebruary 11th, 2015Erica AbbottFinancial Planning for Women Assistant

Website: www.usu.edu/fpwSearchable blog: http://fpwusu.blogspot.com/Facebook

Be Sure to Sign Be Sure to Sign AttendanceAttendance• Drawing for free financial

consultation with Dr. Jean Lown• And personal finance books• Attend at least 2 of the 3 FPW

meetings in January – March

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Steps to Breaking Down Steps to Breaking Down BarriersBarriersConfront yourself!

Analyze: Where are you now?

Build confidence and identify something worth saving for

Things to consider when saving

Breaking Down Barriers

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Bad Money ScriptsBad Money ScriptsMoney Scripts is a mindset that

we create that can negatively effect the way we see things

*Based on the article, “Top 10 Money Scripts that Mess-Up People’s Financial Lives. Published May 2009.

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Are you NOT saving Are you NOT saving becausebecause• More $ will make things better• You understand the importance of

savings, but don’t think you can save until you make more $• Switch that mindset!• It’s not what you earn, it’s what you

keep! • Even low income households can find

a way to save money

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Are you NOT saving Are you NOT saving becausebecause• Money is Bad• Rich = greedy, insensitive, unloving,

etc.

• The point is that money is neither good nor bad in and of itself; it is our own relationship to it that will determine whether it turns out to be a good thing or a bad thing.

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Are you NOT saving Are you NOT saving becausebecause• I don’t deserve $• Giving too much to others (children,

parents, spouse?)• Neglecting to save some for YOUR

future

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Are you NOT saving because

I deserve to spend moneyWork hard, play hard!• It’s okay to enjoy your money• DON’T go beyond your price range• Do save enough to enjoy your future

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Are you NOT saving Are you NOT saving becausebecause

There will always be enough $Grew up rich and/or married

into $ $ just appears when you need it

What happens when the money well runs dry?

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Are you NOT saving Are you NOT saving becausebecause

Money is unimportant$ does NOT equal happiness,

fulfillment, etc.Ignoring $ or making bad

financial decisions doesn’t add to happiness, fulfillment either.

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Not saving could make things worseArguing about $ is the #1 cause

for divorce in America

-Family Relations journal, “Examining the Relationship Between Financial Issues and Divorce.”

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Are you NOT saving Are you NOT saving becausebecauseIf you are good, the Universe will provide

Regardless of how “good you are” your financial life will NOT take care of itself

The better you are with $ the more opportunities you’ll have to help othersYou must first take the time to better

yourself before you can help others

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Are you NOT saving Are you NOT saving becausebecauseMoney will give meaning

“You can never get enough of what you don’t need to make you happy.” 

Keeping up with Joneses isn’t fun!

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Money is just a tool– when used correctly it can build something! SecurityFinancial peaceAllow you to help othersLife aspirations

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Are you saving too much?Are you saving too much?

There will never be enough $Just like there’s an obesity

epidemic in America there’s also an overspending problem.

Some American’s are on the other side of the spectrum though (underweight and over-saved!)

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Are you saving too much?Are you saving too much?

Make sure you aren’t sacrificing other important things to save or earn moneyHealthValuable time with Family &

Friends

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Are you saving too much?Are you saving too much?

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Reflection SheetReflection Sheet

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Reflection SheetReflection Sheet1 = very low10 = you’re feeling great about where you are

◦4 blank spaces to fill in and rate with other financial areas (see sides for ideas)

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Reflection SheetReflection Sheet• *You could be a 10 in a certain

area even though you don’t have all the $ you need if

You have a plan You’re feeling confident and on

track to reach that particular goal

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Reflection SheetReflection SheetShare with your neighbor an are

that you are doing well inIf you want, share what you’ve

done to get there

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Reflection SheetReflection Sheet• Pick out an area you’d like to

work on• Does NOT have to be the one

that you rated the lowest• # 1 rule for goal setting = it

has to be relevant to you!

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Reflection SheetReflection Sheet• Think– what would it take to move

you from a “5” to a “6” on the scale• You’ve saved for your dream

vacation, retirement, kids’ college fund, etc.

• Now envision yourself there. What is it like?

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Consider the needConsider the need

When you think about savings, think about why you’re doing it?

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Consider the needConsider the needEmergency fund savings:

“If we knew for sure that in the next month we would have a flat tire, wouldn't we make sure to have a spare in the trunk? In similar manner, since we know that sooner or later we will all experience unexpected financial emergencies, the best preparation is setting money aside for that purpose”

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Consider the timingConsider the timingDon’t wait until the end of the

month to save

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Consider the AmountConsider the Amount• Have a dollar amount attached to

your goal.• If the dollar amount feels

overwhelming, break it down into a more obtainable goal.• Build up from there

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Consider the MethodConsider the Method• Best method is to do it directly

from your check• Out of sight = out of mind!• Kinda like taxes• We don’t think about how much we pay

in month to month- then surprised when we file.• Elections held in November instead of

April

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Consider the LocationConsider the LocationWhere you put your $ mattersMore than just the rate of return

you get on your account– think about accessibility.

Easy access could mean easy spending

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Reflection SheetReflection Sheet

• What steps would you need to take to reach your goal?• Now– what barriers do you see

that might hinder you?• What are some ways that you

can overcome those barriers?

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Breaking Down Breaking Down BarriersBarriers

It’s HARD to save today Solution = DON’T!

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Hard to save TodayHard to save Today

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Hard to save TodayHard to save TodayHave a piece of chocolate in front

of you◦It smells delicious◦It looks super tempting◦It’s hard to say no, now! So go ahead

and eat it

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Hard to save TodayHard to save TodayBut… what if I tell you I’ll bring

you the chocolate at the next FPW?◦Easier to make sacrifices (say no!)

when it’s not right in front of you

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Hard to save TodayHard to save Today• Moral of the story:• Set up a delayed Automatic savings

plan. • Set it up to start taking money from your account next month (or 3 months from now) and put it towards your savings goals

• The trick is to set it up today! •Doesn’t work if you don’t set it up

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Where to Find $ to Where to Find $ to SaveSave•Tax returns

•8 out of 10 people get a refund

•Average refund is $2800!

•Even low income tax payers get an average of $2000 back

• It’s NOT too late to put $ into retirement for the 2014 tax year

•Have until April 15th, 2015 to do so.

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See the $ you savedSee the $ you saved• $2000 invested in 2015 from your tax

return is $4318 *10 years from now!• $9322 in 20 years• > $20,000 in 30 years!

• *Assumes an 8% rate of return37

Barrier: High Barrier: High ExpensesExpenses•Mortgage, kids, cars, debts, etc! All take a toll on your budget• Pay yourself first• Review expenses•Consider cutting back, rather than cutting out

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Where to Find $ to Where to Find $ to SaveSave• Drop of $1.30 a gallon of gas since November• Could save an average family $1000 in fuel over the course of a year• Don’t wait to save– go ahead and invest that $ now!• See FPW past presentations for great mutual funds

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Barrier: High Barrier: High ExpensesExpenses• Paying off consumer debt offers a high rate of return!• CNN Money says: Average credit card debt is nearly $16k in 2012! • Average rate was > 15%!• Better return to pay off debt than invest the $

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Barrier: Low IncomeBarrier: Low Income

“The myth associated with high-income earners saving more is false. Truth: financial problems don’t discriminate. They affect all ages and social classes. Studies have shown that modest income earners who saved diligently have an extremely high net worth.”

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Barrier: Lack of TimeBarrier: Lack of Time

As America Saves states, "One of the most important things you can learn in life is how to save money. It’s the first step to getting where you want to be….once you start it gets easier and easier."

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Upcoming March 4 (early) Upcoming March 4 (early) • March 4 (early due to USU spring

break): Financial Planning Basics• Now that you are savings, it’s time to

start planning

• Check the searchable FPW blog for lots more ideas on Saving• http://fpwusu.blogspot.com/

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