Maintaining the Saving and Investing Momentum

Happy New Year to everyone.  A fresh calendar year is always a good time to step back and take a fresh look at the financial big picture and create a new plan.  With so many people starting to save (the savings rate is now positive in the US) pay down debt, or invest, continuing with positive behavior should be easier.  However, for me, the challenge is not being burned out from frugal, simple living; and not being tempted by some of the new toys (electronic gadgets) that are my splurge downfall.  For those of you who are on a multi-year path of saving and investment, especially for goals like early retirement, to paydown large debts, or to save for the future, here’s some suggestions to stay on track.

–Give yourself some time to reflect on your progress, including a self pat on the back if you’ve kept to your goals in the past year

–Create small intermediate goals, such as a specific goal to save toward or a credit card debt to extinguish, so that longer-term goals aren’t in a vacuum.

–Each year, examine your budget and plans for the next year.  Be sure to make adjustments if the past year was unrealistic.  One of the reasons that I observe people abandoning their savings and investment goals is because they were set unrealistically.  This is especially true if a budget is so austere that everyone is miserable.

–Re-review your regular expenditures to see if changes can be made — this includes cell phone plans, memberships, insurance policies.

–Re-review your investment strategy to make sure you on on track for your long-term goals.  One of the biggest risks, especially for young people, is that their savings won’t outpace inflation.  Unfortunately, although a bank CD or savings account is tempting after the downturn in the markets in 2008, typically these are not suitable for the bulk of long-term retirement accounts.

posted at this week’s Carnival of Personal Finance