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  • Writer's picturePeter Mu, CFP® ChFC®


According to the Living Balance Sheet, 29% of Americans have savings less than $1000, 56% have savings less than $25,000, 97% of baby boomers have not saved enough for retirement, and 55% of Americans have not saved one penny last year.  Our credit card debt is at an all time high of $772 Billion dollars and college graduates collectively owe more than $1 Trillion in student loan debt.(1)  To put that in perspective Greece’s national GDP in 2013 was $242 Billion and the national debt was $424Billion(2).

How could this be?  How have we done so poorly in saving for the future?  This two-part article explores some of the causes to this failed level of personal savings and what we can do to change.

Vague Goals.  Your goals should be clear and measurable so you know when you’ve accomplished them.  For example, “I want to do a better job saving money” is not a goal.  It is a statement of intent.  Instead, “I want to save $600 by Oct 1, 2015 for a new ski season pass.” would be a much better goal.  It specifies the amount, the purpose and a time frame.  This way you’ll know when you get there.

Underestimate the true cost of living.  Few people can very accurately track all the money we spent.  We eat out more often, spend more than we remember, loose track of pocket cash and fail to predict unexpected expenditures.  Regardless the reasons most of us underestimate by 5-10%, some even 20%.   

We feel that we “deserve nice things.”  Personally I can totally relate to this.  Behind the glamorous life style of Silicon Valley is this relentless culture of work-life integration.  Smart phones, smart watches and push-notifications keep us mentally engaged all the time.  Corporations’ insatiable appetite for efficiency pushes their workforce to an ever-higher breaking point.  For many, spending money becomes an outlet to deal with stress.

Unrealistic reliance on mental strength instead of a system and structure.  Creating a Savings means a change in our (spending) habit and it is by definition not natural.  Initial enthusiasm and excitement will fade over time.  Without a system and structure to serve as a continuous reminder of our mission will only create stress and will not produce our desired outcome.

As a result, many families start on the journey to create savings but ultimately give up.  After repeated failed attempts we start to lose trust in ourselves and choose to become overwhelmed by the daily demands.

This absolutely does not have to be the case. You must approach this with the intent of creating a new habit and not conquering a goal.  I have taught many people a simple system to achieve this.  Read more about it in Part II of this article. 

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