Stay on Track Financially Even When You Don't Really Have To

Tip #300 - Stay On Track Financially Even When You Don't Really Have To - There will hopefully come a point in your life time when all the hard work you put into saving money will start showing some results. One day you'll have $200 in your bank account, and then the next year you'll have $2000 in it, and then a few years after that, you'll find $20,000 in there. It really does happen that way. And you might realize at that point that you have reached the financial goals you have set for yourself. What then? Do you throw your frugal lifestyle and your good financial habits out the window and start living the wild life? Or do you continue on the path you have worked diligently at of keeping expenses low, putting away savings, and investing your money? Continue the path, of course!

I liken this situation to weight loss. If you were overweight and have spent the last year exercising, cutting down on your food intake and eating healthier and are now at the ideal weight, do you just stop what you have done? No! You continue with a maintenance program with a treat thrown in here and there. The same is true for finances. Once you reach your goals, it doesn't mean you can suddenly spend frivolously, although you can probably loosen the reins on your wallet a bit. Like diet and exercise, being careful with your spending and savings is a lifestyle change for the long-term.

Now this may seem like a topic that is not important to you right now. You may not reach your goals until a date in the far-off future. So you may be thinking that this topic doesn't apply to you yet. But it does. Because when you start taking control of your finances, you need to approach it as a life-long goal. It is not a temporary plan that you do once and then go back to your old financial ways. Instead, they way you spend your money, how much you put away for savings, and where you invest should become part of your regular routine like brushing your teeth, eating breakfast, or getting dressed in the morning. You may tweak things over the years, but your overall plan should not change drastically.

Also, as time goes by, you will likely come up with more financial goals or bigger goals. Perhaps your goal of saving for a state college for your daughter changes to that of saving for a private school. Or after you have saved up for your first home, perhaps you want to start a vacation home savings fund. Realizing that your approach to personal finance that you are developing now is a lifetime plan rather than a temporary one will go a long way to making sure that you are successful in your financial endeavors throughout your life.

IRL (In Real Life) - I am already 46 years old! I began saving money in earnest at about age 22 when I started to dutifully put away $200 per month into a mutual fund account. It was primarily to save money for a downpayment on a house, but it was also an emergency fund of sorts. About the same time, I also started putting 3% of my $20,000 salary into my 401k. So I was putting away $2400 per year for savings and about $600 per year into a retirement account. I was pretty much on autopilot. I got paid from my employer minus my 401k contribution. Then I wrote a check to the mutual fund company and mailed it in (yes I'm dating myself here!). Then I paid rent and other necessities. Anything left after that I was free to spend. That was the beginning of my savings habit - pretty simple, and for the most part is hasn't changed since I started.

Now that 24 years have gone by, I have reached or am on track for most of my financial goals. We bought a house and don't need to save for a downpayment anymore. We have a separate emergency fund that has been in place for over a dozen years. Our retirement savings still gets an automatic contribution, and we're on the way to a decent retirement. So now what? Are we done? Can we be frivolous with our extra money now? Trips to Disney every year for my kids? A larger home? A new car every two years? No. We are still putting away money into savings for new, yet undefined goals.

We are a bit "freer" with our money and we have upgraded our lifestyle a bit - staying at slightly nicer hotels when we travel. We give in a bit more on buying treats for our kids than we used to. And we're going on a one-time trip to Disney World with our kids this spring. But our overall financial strategy has not changed. We put away a specific amount each month into savings, continue with our retirement savings, pay our fixed and necessary expenses, and then do what we want with the leftover. That method has served us well so far. We see no reason to change it now even though some of our goals have already been met.