PART TWO: MAKE SMART MONEY DECISIONS
ach of us is capable of changing our habits—and our attitudes—to those that support our long-term financial goals.
The Creating Money exercise will help you think about ways to increase the money you have for retirement investments. After completing Part Two: Make Smart Money Decisions, you will have identified two action steps to move you toward your Happy Ending.
You’ll need six index cards and a calendar for this exercise.
- Take three cards. On each card, name an action you would be willing to take to cut your current expenses.
- Take three more cards. On each card, write an action that you would be willing to take to create more income.
Keep your cards handy. After you’ve read about more ways to decrease expenses and increase income, you may find some ideas to add to your cards.
MANAGE EXPENSES
How can you create more money for retirement? Two common methods are managing expenses and increasing income. As your income increases, so do your options for retirement investment.
The most dramatic task (and for many the most difficult) is to record everything you spend for one month. Once you have this information, you will have a better response to the haunting question: “Where does it all go?”
Here are other ways to manage expenses:
- Search for a free checking account and credit cards with no annual fee.
- Ask for discounts where you do business—the cleaners, your health club. Also consider making annual or semi-annual payments to earn discounts on large expense items such as car insurance.
- Exchange or barter services. Do you have a product or service that you could exchange to get something you are now buying? Some communities have organized systems for trading services.
- Take care of maintenance tasks now. Whether it is changing the oil frequently in your car or maintaining your home, wise owners take care of small repairs before they become big, expensive ones. Though you incur a cost now, you are avoiding higher expenses in the future. That is a wise financial strategy.
- And don’t forget to take care of yourself! Regular health, dental and vision checkups can alert you to potential problems before they become expensive health issues.
INCREASE INCOME
If you wish to increase your income, here are two possible considerations:
- Identify and develop a new skill that will increase your earning power.
- Research other ways to increase your income. Would you consider starting your own business? Changing jobs? Relocating?
INCREASE RETIREMENT INVESTMENTS
The goal of increasing earnings is to find more money to put into your retirement program.
- If you have questions about your retirement plan at work, meet with the benefits representative to confirm your account performance and contribution limits.
- Gradually increase your retirement contributions to the maximum.
- Shop for better returns on your savings and investments given your risk tolerance.
- Review the performance of your retirement plans with a financial professional annually.
REVISIT YOUR CREATING MONEY CARDS
Have these suggestions given you more ideas for Creating Money? If so, you may want to make changes to your cards. Take a look at the Action Steps and Resources in Part Three of this booklet for more suggestions, then incorporate the information that works best for you on your cards.
Prioritize and Assign a Timeframe
Combine your cards and prioritize them in terms of what you would most likely do:
- On each of your top two highest priority cards write specific steps you need to take in order to accomplish the task. If your task is a large, complex one (one you’ve been putting off doing), break it down so you have at least one step that you could complete in six months or less.
- Refer to your calendar and write dates to begin, monitor, and finish each step. Remember to include a date to celebrate the successful completion of your steps.
Personalize and Display Your Creating Money Cards
Have fun with your two cards. Illustrate them with stick drawings or colorful designs. Imagine how accomplishing this task will improve your life. Write key phrases on your card as reminders of why you are committing to this financial step.
Find an obvious place to post your cards. On a mirror, a closet door? Consider asking a friend to help you monitor your progress.
Your Creating Money cards can be the beginning of your financial plan. Modify and multiply your Creating Money cards. When you are ready, choose a professional to work with you to develop a more complete financial plan.
Create the Happy Ending you deserve. Start working toward your goals TODAY, continue making smart money choices, think long-term, plan long-term, and invest long-term. You can arrive at the end of your working career financially prepared.
