Are You Your Biggest Savings Enemy?

by Jason Unger

When it comes to managing your financial success, there’s no one more qualified to make decisions than you. (Yes, not even many fund managers.)

But even though it’s up to you to plan out and execute your financial goals, you may be getting in the way of your own success.

Let me share a story with you.

In the Beginning, There Was Ameriprise

When I first started saving for retirement, it was with Ameriprise — the investing/insurance arm of American Express. The only way I knew them was from a free lunch a co-worker of mine invited me to.

I had a great opportunity to start investing for retirement early (I was still pretty young), and wanted to get going, despite not really knowing how it all worked.

As we began to save and invest, I learned more. I read a ton of personal finance books and started automating my finances.

After a bit of learning, I knew that our investments would be better if I managed them myself, using index funds at Vanguard. But I was worried about moving our Roth IRAs — afraid that I couldn’t handle them and would screw something up.

So I procrastinated. I waited. I extended the process. I even blogged about it, hoping to get my worry out there.

I came up with a ton of reasons to put off making the move. The process was too long. I had questions about Vanguard’s Web site. There would be fees for moving my money.

I didn’t want to make the move. But I knew I should.

Finally, of course, I did it. I can’t calculate the amount of money I may have lost during my time procrastinating the move, but there’s a good chance I did lose some.

It was my fault. And it could have been avoided — if I hadn’t stood in the way.

To Overcome Your Inaction, Set a Goal and Automate

The goal of Automatic Finances is to remove that human element as much as possible from the money management process.

There’s a reason you should pay yourself first and give every penny a purpose: the less you take a wait-and-see approach to saving, the lower the chance you’ll either over- or under-manage your finances and make poor decisions.

  • When you automate your savings, you’ll always have money to pay yourself first.
  • When you automate your investing, you’ll never be tempted to time the market.
  • When you automate your billpay, you’ll never procrastinate paying a bill.

Stop hindering your own success. Set your goal and then make it automatic.

You can either be your biggest asset or your own savings enemy. Which are you?

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