7 Traits of Successful Savers and Investors

man holding white piggy bank

 

As we enter a new year, many people make resolutions to take action to improve their financial situation. Any level of increasing awareness and willingness is a good change when wanting to improve financial circumstances.

With over 22 years of experience as a Certified Financial Planner®, Molly Balunek has observed several distinctive characteristics in her clients that lead them along the path to financial freedom. Here is a brief description of these behaviors:

1. Successful savers are organized

Successful savers keep their finances organized, and are readily able to provide investment and retirement account statements, bank account statements and other financial records that we use to assess their progress toward their financial goals.

2. They spend less than they earn

Successful savers and investors always spend less than they earn and carry no credit card debt. They are aware of their spending habits and make a conscious effort to spend prudently. They also observe the spending habits of others, both good and bad, and regularly assess their own habits to stay on track.

3. Start saving at a young age

Successful savers establish a habit of saving as soon as they begin working. They contribute to company retirement plans, establish IRA and Roth IRA accounts, and build up an emergency savings account.

4. Buy an affordable home

Successful savers and investors accumulate a significant down payment and purchase a home that is reasonable for their income and does not compromise their ability to save for retirement. As their housing needs change, they repeat the same strategy when purchasing another home.

5. Conscientiously use debt as a tool

Successful savers use debt as necessary and develop a strategy for repaying it. They may have student loans or a car loan, and they have a plan for repaying these debts.

6. Drive cars for 10 years or longer

Successful savers buy affordable and reliable cars and drive them for many years. They may use a car loan for the purchase, and once it is repaid, they save that money for a down payment on the next car.

7. Earmark savings accounts for specific future expenses

Successful savers and investors identify goals for specific accounts, including home down payment, home maintenance/repair, car purchase, vacation, etc. They are disciplined about funding these accounts and replenishing them after they are accessed for their stated purpose.

Frequently, we will meet successful savers and investors when they are in their 30s or 40s, and they are seeking an objective review of where they stand relative to their goals. They also want feedback about making changes to the amounts they are saving and how their retirement accounts are invested.

Clients who have been following these behavior patterns are generally on track or ahead of the curve for achieving their long-term goals. We use our financial planning and investment analysis tools to fine-tune their plan and identify changes they may be able to make to provide more flexibility in their finances.

As we enter a new year, we encourage everyone to consider implementing one or more of these characteristics into their financial lives. No matter what life stage you are in, these behaviors can keep you on the path to financial freedom.

Are you on the right path to being a successful saver?

Contact the experienced financial advisors at Laurel Tree Advisors 216-373-0808