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  • Writer's picturePeter Mu, CFP® ChFC®


In order to be successful at creating a new habit you must not rely on will power alone.  You must have a dependable system that is structured to bring clarity and feasibility.  That’s what I am going to teach you here. 

Divide your saving goals into Wealth Building and Purposeful Spending and clearly define them as the following.

Wealth Building is strategic wealth accumulation with asset classes that will someday generate an income when you no longer wish or able to work.  Examples include:

- Cash to purchase a rental income property.

- Permanent life insurance premiums.

- Retirement savings.

Purposeful Spending is essential and discretionary purchases you deem necessary to sustain a good life.   These can be long term or short term.  Some examples are,

- Down payment for your primary residence.

- College tuition for children.

- Potential medical spending for a parent.

- A vacation

- Anticipated car repair.

- A new pair of skis.

-Certain amount of Discretionary spending.

Implement a banking structure that supports these goals.  You should have THREE bank accounts and here is how they work.

Create a Wealth Account to hold your Wealth Building Goals and direct deposit all your income into this account.  In actuality this is a checking account but we will label it “Wealth Account.”

Label your savings account “Purposeful Spending” and allocate from your Wealth Account certain amount each month towards your goals.  This account also serves as over-draft protection.

Label a second checking account “Personal Operations.”  Schedule bi-weekly transfers from your Wealth Account to cover your current living expenses.  Live within your means.  Any remainder will create a savings in the Wealth Account.

Continuous maintenance is key.  Monitor closely your “Personal Operations” account to prevent overdraft.  Each time you get a pay raise split the additional money to reward your hard work and increase your savings.  This way your savings will grow as you make more money.

If you have a business you can use a very similar structure to manage your operational and strategic expenses.

We save because for most of us we have mastered living a good life today and the real challenge is living this good life for the rest of our lives.  I have taught many people this simple system to create savings but SIMPLE does not mean EASY.  Changing a habit takes time but it can be done.  Talk to your Financial Professional and define your goals.  This will be a very uplifting conversation.

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