Christopher Cervantes, a Registered Financial Planner, shares key insights on how to make saving and investing simpler and more efficient by automating your savings. As told to Financial Adviser PH, Cervantes explains that many people are unable to follow through on their financial resolutions because they lack clear goals and actionable plans.
“Being vague with your financial goals will bring you nowhere,” Cervantes points out. It’s essential to be specific about what you want to achieve financially. For example, if your goal is to save for a down payment on a house or your children’s college education, having a precise target will make it easier to stay focused and motivated.
To achieve these goals, Cervantes emphasizes the importance of creating a clear picture of your financial objectives. He explains, “If I could save 30% of my income last year, my goal for this year is 40%. Why do I want to stretch myself that much? Because I want to prepare for the down payment to buy a property from a prime location.” Setting a realistic yet challenging goal helps push you toward greater financial discipline and consistency.
However, knowing why you want to save is just one part of the equation. The other critical part is knowing how to achieve it. Cervantes suggests, “The key to a successful New Year’s money resolution is not to be an active saver.
The key is to automate your saving in your payroll account.” Automating savings removes the mental burden and ensures that saving becomes a passive process rather than an active decision every payday. With automatic deductions, you are consistently saving without worrying about it.
This strategy also extends to investing. By enrolling your investment accounts in your payroll system, you can automate contributions to your long-term goals like retirement or education funds, making your savings work for you without additional effort.
Cervantes concludes by encouraging individuals to be mindful of how they spend, not just how they save. With automation in place, you free yourself from having to remember to save and focus on making informed financial decisions. “Start being mindless on saving,” he advises, “and instead, be very mindful of how you are spending.” This approach ensures that you’re on the path to financial freedom without the struggle of traditional saving methods.
