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How to Trick Yourself into Wealth in Four Steps or Less

Diligently saving for your future is an important goal. But it is not second nature for many of us. How can you become an amazing saver? Trick yourself with these four steps.

  • Step 1Make it easy to save. Do you know what gets people to invest in their 401k retirement plans? Automatic sign-up. Once enrolled, most people will contribute paycheck after paycheck to their 401k because opting out takes effort and staying in does not. So the next time you get especially excited about being fiscally responsible (perhaps right now?) – up your automatic monthly contribution to a 401k, retirement plan, 529 or brokerage account – there’s a good chance you will stick with it. Repeat this step often.
  • Step 2 Remind yourself how much you spend. Do you love the ease of automatic bill pay? Do you know who else does? The companies that offer it. A study from Duke University found that those who auto-pay their electric bills use 5% more energy than those that do not. While auto-pay is undeniably convenient, it decreases your likelihood of reviewing your bills and itemized charges, psychologically encouraging more spending. Examine your bills regularly to remind yourself that spending has consequences (do it as a couple for added effectiveness!)
  • Step 3 Forget about some of your money. Don’t forget about it forever, but if you invest a sum of money in a separate account from your regular accounts, there is a fine chance you will leave it alone and let it grow. When you remember you have it, it will feel as good as a Monopoly “bank error in your favor” card and could be just what you need to make a major life goal come true.
  • Step 4Make it hard to spend. Online shopping, smart phone apps and those giant carts at Costco make it too easy to buy stuff you really do not need. In the moment, purchasing goods creates a great feeling of fulfillment. But over time, that excitement dissipates. Instead of giving in to the desire for immediate gratification, postpone new purchases. Add them to a wish list. Revisit them in a week or two. If you still are excited to buy, fantastic. But if not, you may find your spending dropping, allowing you to go back to step one and up your automatic savings.

While becoming a super saver is a challenge, a few modest adjustments to your behavior can lead to a huge bump in your wealth over time. Now go ahead and increase one of your automated monthly contributions accounts this second! (I increased my children’s 529 plan contributions as I wrote this article.)

Jonathan Bernstein is a Senior Research Analyst within Hefren-Tillotson’s investment advisory group. Jonathan is a graduate of Yale College, a Chartered Financial Analyst charter holder (CFA) and a CERTIFIED FINANCIAL PLANNER certificant.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.
Investment Advisory Team
Hefren-Tillotson

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Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills.