Attaining financial success involves traditional techniques handed down for decades. People who want to have enough money when they retire need to obtain stable employment, habitually deposit money in a savings account and grow some of the savings by investing in conservative investments. However, practicing these virtues does not always indicate that the person is going to experience a sense of complete financial security.
For instance, numerous retirees have plenty of money in their savings and investment accounts but never spend any of their funds. These retirees are afraid they will not have enough money for their future necessities. Consequently, a person with a healthy financial strategy does not focus solely on saving money and increasing assets. A person also needs to have the right state of mind and an innate capability to predict a secure future.
An individual experiencing financial health needs to have money in the bank and a positive attitude. According to Sarah Newcomb, a behavioral economist on the Morningstar staff, a financially healthy attitude involves refusing to feel guilty about spending money on a vacation to Europe or brand new furniture. Retirees who constantly hoard up every dollar for fear of spending more than their budgets permit are not financially healthy.
A pessimistic attitude about the future deters a person from attaining an emotionally healthy state of mind in relation to finances. Newcomb conducted an online survey that included 500 adults. In the survey, she offered an explanation regarding two mental exercises conducive to attaining healthy attitudes about savings and investments.
1. Look at the entire forest instead of focusing on nearby trees.
An outlook embracing the future helps a person to make wiser decisions about finances. Retirees who only focus on what may happen during the next few weeks or months may find that they are not able to save a great deal of money. The study showed that thinking about what may happen three to five years into the future enables people to save approximately four times more money than those who only make short-term plans.
However, it is difficult to think far into the future because the average brain wants to experience instant gratification. Newcomb suggests that people meditate about their financial futures. Meditation about what may happen in their lives five or 20 years ahead helps people make better assessments about their present financial habits.
For instance, a person who is financially strapped and in heavy debt needs to think about the future financial ramifications of a lifestyle consumed with overspending. People can decide today whether they wish to keep falling deeper into debt or gain control of their detrimental spending habits. Younger people may need to curb their desires for extravagant possessions in favor of living as perfectly contented retired individuals in the future.
Visualizing needs to encompass specific goals rather than vague notions. A person should think in terms of exact details. For example, it is nebulous to say, “I need to save money for my golden retirement years.” Instead, the person should think, “I need to find a way to increase the amount of money I save every week until I am able to save a minimum of 20% of my earnings by the end of five years.” Another helpful tactic is to think, “My goal is to study French and spend three months in Paris, France, visiting art museums and eating French cuisine. I plan to accomplish this goal during my first year of retirement.”
Cultivate a Positive Mindset
According to Newcomb’s survey, people who believe they create their own financial futures typically harbor positive emotions when compared with people who feel utterly powerless about their finances. People with lower incomes feel happy when they make their own financial decisions. In fact, many self-directed lower income retirees feel more contented than people who earn higher incomes.
Newcomb’s survey indicates that dwelling on past mistakes is a ticket to financial failure. People need to think about their past successful ventures and take pride in their previous accomplishments. Instead of dwelling on errors, people should focus on the few correct decisions they made about their retirement plan contributions or refinancing their mortgages to obtain lower interest rates.
In addition to saving money, it is also important to learn risk management strategies. Establishing conservative investments offering substantial quarterly dividends yields a favorable way to invest. People can live comfortable lives during their retirement years if they opt for sensible investments instead of investing in wild, unpredictable stocks.
A Few Words About Agora Financial
Agora Financial was founded in 2004 as an offshoot of its parent company, The Agora, Inc. which was established in 1979. Agora Financial offers independent research and commentaries about finances and the economy via printed publications and online sources. Offering both complimentary and paid publications pertaining to finance, the business informs prospective investors via educated commentaries combined with the latest stock market news stories.
With forthright financial predictions offered by the editors, Agora Financial has received praise from several edifying publications including The Economist, The Wall Street Journal, Fox Business News and the Los Angeles Times. Agora Financial has consistently published informative forecasts for the past 25 years. The publication often published relevant information unrivaled by mainstream publications. Many of the accurate predictions may have left readers wondering whether the CEO possessed a financial crystal ball.