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5 Counterintuitive Money Mindset Facts

5 Counterintuitive Money Mindset Facts

Money is a tricky, slippery thing.

The funny thing is that, while everyone needs it and there’s more than enough to go around, money can be really elusive at times.  It can seem as if “enough” is a word that can never be paired with money…

…until you begin to look at things from a different perspective.

Turning Money Into A Science

Sciences are measurable. They’re quantifiable.

And while science isn’t always “easy,” there’s always a logic behind it, ready to be discovered….just like money matters.

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As it turns out, money isn’t really as elusive as we might think at first. You just have to know what it loves and needs to thrive in your life.

So Start Looking At Things From Money’s Point Of View

It really shouldn’t come as a surprise that, like all green things, money needs a certain type of environment in order to thrive.

And by that, I mean:

1. Money likes it when things stay fresh

Just like how mold and bacteria grow in stale environments (like my leftovers in the fridge), money becomes stagnant if it’s kept in one spot for too long.

Money longs for adventure; it longs to see new things. That’s called investment.

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If you’re only tucking your extra cash into a savings account for a rainy day (though, not a bad idea), you’re actually not going to get a lot in return. But if you’re investing it wisely and keeping it fresh, you’ll get a much bigger payoff…even if it takes a while for that to happen.

2. Money needs a specific purpose

Seriously, this is Money 101.

Have you ever noticed that, if there’s something you absolutely have to buy, money for that item is usually available? On the flip side, if you don’t have any specific use for that money, you’ll notice that there tends to be a lot less of it floating around.

Without a specific purpose in mind, money is easily lost. It’s something that has a lot to do with the human psychology of saving: we need to have a specific goal in order to really care about earning and achieving it.

3. Money needs a long-term goal

This is something that economists often talk about in really fancy words (often coupled with the term “projection” which, let’s face it, makes us all cringe).

But in everyday speech, money needs a long-term goal. One of the reasons we struggle with having money to spare is because we tend to think of very very short term solutions.

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For example, I really enjoy going to a coffee shop to get my morning java. Hilariously, it makes me feel wealthy to buy it. I say “hilariously” because there are two ways to think about it:

  1. $3.00/day is totally affordable. I am not going to get poor by spending that much on my daily coffee.
  2. After one year, I’ll have spent $1,095 on daily coffees…I totally will not get rich by spending that amount.

So if you want to see your dollars add up, get out that calculator and figure out the long-term effects of your short-term money decisions.

4. Money loves to find someone who loves it

Some of us heart-centered people shy away from boldly proclaiming that we want more money…but we shouldn’t.

Because the money’s out there, and I’m confident that there’s more than enough to go around.

You have to want it. You have to be intentional. If you don’t find a use for your money, it’ll find someone who will!

This doesn’t mean that you’re giving yourself permission to be a selfish, money-focused person. What I’m talking about is being honest about your goals and being sure that “making money” is on that list. It’s something that business owners do all the time.

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5. Money likes to be given away

In light of the last point, this one may seem contradictory.

Honestly, I can’t say exactly why this works, unless it’s some sort of universal karma…but the times when I’ve been consistent about giving money away (maybe a percentage of sales to a charity, a straight up donation, etc.) often coincide with times when my online launches and business revenue are maintaining healthy levels.

Let this serve as a reminder for all of us that money is a great tool that can help us live healthy, balanced lives.

So….what’s your money mindset?

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Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

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This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

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