Home Personal Finance Smart Financial Planning: Make Saving Your Craving

Smart Financial Planning: Make Saving Your Craving


I have a confession. I love cookies particularly oatmeal raisin. I have one with my mid morning coffee, another in mid afternoon. Then, if no one is watching, I slither into the kitchen late at night. That’s where all restraint gets tossed out the window.

If you have the impression that I am some obese character totally lacking in will power, not to mention, common sense, you would be wrong. I am the same 180 pounds that I was in high school. I am also an avid fitness freak running 15-25 miles a week and spending the rest of the time in the gym. My heart rate is an amazing 55. The primary care doctor in my last physical described me as “the poster boy for good health”.

So what do oatmeal cookies have to do with successful financial planning? The answer is habit. My intimate relationship with oatmeal cookies started about five years ago with only one. Slowly it built until today I am a five-a-day oatmeal junkie.

When not eating them, I am thinking about them: smooth, delicious and so chocolaty.

Successful financial planning is no different than developing addictions to something like delicious sugar filled raisin infested oatmeal cookies.

Getting started is the hardest part but it doesn’t have to be. For many the stumbling block is between their wishes and dreams (translation: having huge wealth) and the process of getting there. Starbucks is a prime example.

Most people will not think twice about spending $5 for coffee each day so why not start putting $5 aside every time you go to Starbucks. If you have an online bank account, simply open a savings account that is connected to the main account. While you sip away at your super Grande Latte just make a $5 transfer into your savings account.

The irrefutable law of addictive behavior states that as some point you will see your savings becoming more meaningful and you will keep putting the $5 in everyday with or without the help of a Starbucks booster. That is when the craving for savings takes over; bingo you’re hooked.

Lets say your present age is 25 and your addiction lasts for 30 years during which you open a tax-deferred account like an IRA. Over time there will be good years and bad but on average your yield is 10%. It all adds up to over a $120,000 of cash from your addiction. And that if you start with just $5. Believe me, that ends up being a lot of oatmeal cookies!

The idea is to find a pain free technique to get started. If you are over 25 it doesn’t matter. Instead of putting in $5 start with $6 or $7. Wherever you start, there is a very good chance that you will see the money piling up and become obsessed with making more, faster.

From experience, I think of this as the Marathon Training syndrome. You start out with a pain free easy distance like one mile. Before long you are competing in 5K and 10K races and after that it is straight to the big 26.2 mile run. Ok, so get on your running shoes and let’s head out to Starbucks.

Why is all this lecturing about savings so important? America is a country whose personal finances are in worse shape than the Federal Government. Yes, it’s that bad. Quoting the February 15, 2017 Wall Street Journal, “Americas 75 million baby boomers have piled up more debt while holding less savings than generations before them…”. The average savings of this group has fallen to a paltry $14,500 compared with almost $100,000 in debt. There are actually people in this advanced age group that are still paying off student loans!

In the past these issues were less important. Nearly half of the households in America in 1985 were covered by things like the company pension plan. We all know where that has gone. Today less than a third of retiring family receive income from a pension fund.

This is a wake up call to all millennials, don’t let this happen to you. If you think you can outsmart the system by earning more, working until you draw you last breath or marry a rich old spouse with a bad heart, the odds of your strategy succeeding are pretty low. No matter how blissful the present may appear, imagine yourself 50 years from now when your skills are obsolete and you find yourself in a blue Wal-Mart vest greeting shoppers in Omaha Nebraska at $12 per hour. Take the first step today and at least open an IRA account. If you do, I promise to share my wife’s oatmeal chocolate chip cookie recipe. Start the habit.

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