Check out these four tricks used to get you to spend more (without you knowing it).
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They’re called Black Friday warriors.
They’re the stalwart souls who, after polishing off a turkey dinner with the family, suit up in matching shirts, brave the holiday chill, and hit the malls (or the electronics stores, or the big box stores, or all of the above) with a single purpose in mind: scoring big Black Friday deals.
True veterans of this holiday shopping tradition have planned for weeks, scouring websites, tracking prices via cell phone, and studying store layouts to ensure the success of their quest. They often work in teams, powering through the crowds all night and into the wee hours of the morning, checking off their Christmas gift lists as they go.
Then, with dawn behind them, they toss their empty coffee cups aside and make one last caffeine-fueled sweep of the late-morning sales before heading home with their cars as packed as Santa’s sleigh.
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That’s a lot of time and effort to put into one night of Christmas shopping. Is there a way to put that planning prowess and deal-seeking tenacity to work toward a goal that will pad your bottom line instead of the retailers’?
Yes! Those Black Friday warriors actually have a lot in common with folks who successfully save for retirement. The two topics may seem as different as day and night, but we’ve got three quick lessons you can learn from Black Friday shoppers that could help you improve your retirement savings plan.
Begin With the End in Mind
Smart shoppers wouldn’t think of heading out on Black Friday without setting specific goals. They know which stores they’ll go to, what they’ll buy, and even how long they’ll spend at each store.
You also need specifics when you’re saving for retirement. Start by talking with your spouse about the kind of retirement you envision. It could be vastly different from their plans! Together, decide where you will live, whether you plan to work, how much you will travel—as many details as you can think of. Those details will help you set a realistic savings goal and serve as inspiration as you work toward that goal.
Then, just like Black Friday shoppers, you’ll need to plan each step of your retirement strategy. Here’s a checklist of actions you can take (with deadlines) to help you start investing for retirement early in the new year:
1. By January 15: Get information from your Human Resources department about your employer retirement plan—401(k), 403(b), etc. No employer plan? Skip to number 3.
2. By January 30: Begin automatic investments in your workplace plan up to the employer match.
3. By February 15: Schedule a consultation with an investing advisor about opening a Roth IRA.
4. By February 28: Select your mutual funds and begin automatic investments in your Roth IRA.
5. If you aren’t investing a total of 15% in your employer plan and Roth IRA, review your budget every three months and try to increase the amount you’re investing until you reach that 15% goal.
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Don’t Get Sidetracked
To make the most of their time, Black Friday shoppers know they can’t get every deal at every store. They pick their must-have items before they hit the stores, and they stick to the plan once the shopping has begun. Getting sidetracked by a surprise deal means they lose valuable time and may miss out on other items on their lists.
The same applies to retirement investing. You can easily lose your focus on your retirement plan when the stock market surprises you with its big up and down swings. But, just like those savvy shoppers, you have to maintain your commitment to your plan, or you’ll be in danger of missing your retirement goals.
Studies show this is a classic investor problem. Instead of sticking with their mutual funds for the long haul, they sell them in a market downturn and buy them back in a rebound. That means they buy high and sell low—the exact opposite of how investors actually make money in mutual fund investing.
A market downturn is actually a growth opportunity. When the stock market drops, so do the prices of mutual funds shares—that means you’re getting a great deal on mutual funds. When the market bounces back, you’ll have more funds to fuel your nest egg’s recovery and future growth!
Team Up for Success
Black Friday shoppers like to plan their shopping strategies and hit the stores in teams, or at least pairs. They can cover more ground and it’s nice to know there’s someone close by who’s on your side.
When you’re investing for retirement, it’s essential to work together with your spouse. Successful retirement planning will probably take some type of sacrifice or lifestyle adjustment, and it will be much easier to carry those out when the two of you are on the same page.
For an additional layer of security and confidence, work with an experienced investing advisor who can help you set your retirement goals and map out your investing plan. Your advisor will be also there to help you maintain your plan for the long term.
Finding a professional you can trust with such an important mission can be tricky. But Dave’s team has built a network of experienced investing advisors, each with the heart of a teacher. Our Endorsed Local Providers (ELPs) have earned Dave’s recommendation for excellent service. Let us put you in touch one of Dave’s investing ELPs in your area today.