Happiness Now, Happiness Later

By: Danilo Kawasaki

Inevitably, you are now planning your New Year's resolutions. If my guess is correct, exercising more and saving more money are probably at the top of your list, year after year. Why are most people so bad at this money thing? It is not your fault, entirely. Your brain isn't necessarily wired for it. Just think how hard you work to fight against your own self-defeating impulses. But there is hope. Here are a few tips to get yourself to do the things you already know you should do.

Take Pride in Being a Saver

Savings are invisible, no one sees it. No one talks about it. Spending on the other hand is visible, especially in the social media era we live in, where it is "cool" to brag about your earthly possessions. However, sooner or later, the day of reckoning will come: you won't be able to meet a financial emergency; or you will need to tell your kids that there is not enough savings for the college they want to attend; or you will have to work forever because you don't have enough to retire on.

Be proud to be a saver. Brag about the fact you are maxing out your retirement contributions, that you have a college savings plan for your kids. You should aim to save at least 20% of your income and learn how to live on the rest of your money. Find balance in your approach. Extreme measures are hard to maintain over a long period of time. If 20% is too much, start small and slowly increase over time. Hire a financial advisor to keep you on track of your financial goals. People with a plan are at a decided advantage over those who merely react as things happen in their lives.

Pay Yourself First

Don't wait for the end of the month to see if there is any money left for you to save. That's a common mistake I see too many people making. Instead, set up an automatic transfer into your investment accounts for the day you get paid. Out of sight, out of mind. You and your future are the most important "bills" you have. Learn how to live on the rest of your money. Adjust your lifestyle a bit if needed, but don't fall for the trap and wait for the end of the month to put money away. There is rarely any money left.

Fight Temptation

We live in a consumer society. 70% of the US's GDP (gross domestice product) comes from consumption. We have to push back against this consumer system that preys on our weaknesses and create better savings habits. Go through your annual credit card and bank statements for 2017. See how much you actually spent in each category. Compare that against how much you saved through the year and what you actually have to show for it, after working so hard for yet another year. Meet with your financial advisor to discuss where you can make improvements, areas you can cut spending, and how to turn that into savings that will actually increase your net worth.

Then, work on your budget. Know how much you should spend in each category and have someone or even an app hold you accountable to it on a weekly basis. One reason we don't have self-control regarding savings for the future is because we are very emotionally disconnected to our future selves. Have some role models, people who did very well planning for their future AND people who didn't. Learn from their struggles and don't make the same mistakes.

After 15 years of advising people on money issues, I find the best approach to be a balanced one. You can still do the things you want to do now AND save for the future. It doesn't have to be one or the other. You just need a better plan. Making the right trade offs will be key in finding this balance. Let me tell you a secret: don't try to keep up with the Joneses. They are broke!

Securities offered through LPL Financial, Member FINRA/SIPC.
Investment advice offered through Gerber Kawasaki Inc, a registered investment
advisor and separate entity from LPL Financial.
The opinions voiced in this material are for general information only and are not
intended to provide specific advice or recommendations for any individual. To
determine which course of action may be appropriate for you, consult your
financial advisor. No strategy assures success or protects against loss.
Gerber Kawasaki, 2716 Ocean Park Blvd. #2022 Santa Monica, CA 90405.
Contact us at (310) 441-9393.