A Little Bit of ‘Pain’ Now, Can Save You Money Later

Illustration courtesy of Bankrate.com

By Justin K. Thomas

July 16, 2018

Even with the start of remarkable wage growth and decreasing unemployment rate, about 20 percent of Americans are not saving any of their yearly income which can significantly hurt their chances for a more comfortable lifestyle after working, according to a survey conducted by Bankrate.com.

But according to Larry Faulkner, a volunteer certified financial education instructor at the Financial Literacy Coalition of Central Texas non-profit, it’s never too late to change for the better.

“In my experience, people can easily start the journey to financial independence while they are working and before they retire,” Faulkner said. “But, they haven’t completely mapped out the destination. And there are plenty of legitimate avenues to reach financial goals. It will just take a little time and effort.”

Faulkner said that several simple steps could help to assist you and your family maximize present income for future aspirations.

“Developing a realistic budget is the center of overall financial success,” he said. “Researching the different aspects of financial literacy and disciplining yourself to not always buy that breakfast sandwich and cup of coffee three to four times a week, for example, are amazing ways of keeping your hard-earned money in your wallet or pocketbook.”

Chad Rickenberg, a retired U.S. Navy Senior Chief Petty Officer, said that proper planning helped him stay ahead of the financial curve and is now looking forward to traveling while in retirement.

“I was pretty good with my money over the years while on active duty,” Rickenberg said. “Of course, there were emergencies, but I did my best to negate them. I also owe the fact of my financial success of today for the discipline I established years ago. When I was a junior Sailor, I purchased a house in 2000, then, two years later, refinanced it from a 30- to a 15-year loan. I was able to pay it off in 2016, which freed me to be able to take out a new mortgage for my post-Navy home. Now, I've got a whole year to casually move from my current home to my new house, then sell my old house with minimal pressures. Being in a financial position to facilitate a move like this takes off a lot of pressure to find a house and sell the old one quickly. Once sold, the money from the old house will go on the new house mortgage, so that I can shorten the loan from a 30-year to a 15 year.”

Also, Rickenberg said he also “thought outside the box” when it came to paying himself first.

“I have several bank accounts I use to help with finances,” he said. “One is for bills, one for vacation, one is for gifts, and one is the goal-setter slash emergency account. Each paycheck gets divvied up between these accounts and whatever is left over is my dining out or "play" money. And for retirement, I maximized the annual contribution to both my and my wife's Roth IRA's and got in on some early technologies.”

Faulkner said that learning more about the different aspects of financial literacy and saving a percentage of your salary for “rainy days” can eventually assist in creating an investment for retirement.

Although the extent of your emergency fund is contingent on your income, the number of family members and expenditures, the general thought is to put away at least 12 to 15 percent or four to six months’ worth of expenses, according to Faulkner.

“Saving money for you and your family’s future might initially be ‘painful,’” Faulkner said. “But with time, the ‘discomfort’ will minimize and saving money will get much more comfortable as you progress. Your job must not only fund your life today, but it must also fund your future.”

Faulkner is also the author of the award-winning book, “Messages From Your Future: The Seven Rules for Financial, Personal and Professional Success.”