Roadblock #4 - Low Savings Rate
Have you ever asked yourself questions like how much money did I save last year? And what is the right amount to be saving annually?
Most people have and what few people know are the real answers. Your goal should be to save 15-20% of all that you make to become a world-class saver. By saving at least 15% of your gross income, you can better avoid risk and be more in control of your financial future. Think about just how much money could be going directly onto your balance sheet for future use, setting you apart from most people today; simply by saving.
Why does it feel like I am never making progress?
It will feel like an uphill battle if you are saving only 5% of your income which can also prompt you to play the game of catch up and take more risk with your money. These investment
risks may not always turn out favorably and can end up setting you back.
Don’t forget about new technology...
The speed with which technology is being pushed to you is at an all-time high and what you own is made obsolete through new advancements. When you take money off of your balance sheet to buy the new and improved, such as a new TV, computer, smart phone, that money is no longer available for college expenses, retirement or other financial opportunities. Also remember that items you’ve bought have a lifetime, such as: cars, tires, shingles, clothing and appliances. All of these items will someday have to be replaced.
Inflation, Taxes, Improving Lifestyle, OH MY!
The combination of inflation, taxes and an improving lifestyle can be a significant obstacle to achieving the financial results you are aiming for. All of these factors collide and add up to put greater pressure on your financial future. Additionally, there is the possibility of an unexpected life event such as parent care costs, a child’s education that costs more or lasts longer than expected or something mother nature throws your way.
What should you be doing to get ahead?
The best thing to do is to develop a healthy world-class savings habit by learning to live your life on 80-85% of what you make. Remember to not plan for your tomorrows before
your today’s are perfectly and properly protected. Work with a Living Balance Sheet® professional today, to understand how you can become a world-class saver. Learning to live your life on 80-85% of what you make is the single, biggest success ingredient to your finances.1
Get more insight on this Roadblock by viewing this video: https://vimeo.com/144901460
Check out the other Roadblocks below:
#2 - Chasing Rate of Return & Market Timing
#3 - Over-reliance on a 401(k)
1 - Source: The Precarious State of Family Balance
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