It’s hard knowing how to allocate your money, especially when you’re feeling stretched in all directions. A big challenge is the balancing act between the daily grind and important long-term expenses. It’s hard to prioritize saving for retirement when there are there are bills needing to be paid today.

My best advice is to live within or under your means, and to understand how one splurge leads to another.

For instance, overspending on the purchase price of a home likely creates overspending in property tax, insurance, and maintenance. Additionally, there can be the desire to keep up with the Jones’, causing you to take on projects that really kill any chance of creating savings. Living at or below your means may not feel as fun, but being in control of your finances is empowering, which shouldn’t be underestimated.

In a similar vein, another big decision I encounter is to send a child to a private high school. If you haven’t noticed, there are many great options in the Merrimack region. The opportunity can be too good to resist, but not only is the tuition difficult to pay, the child can come home with new expectations for clothes, parties, gifts, cars, trips, computers, etc. The worst outcome is sending the child for 1-2 years, only to pull out in the end and receive a degree from public school. Maybe the experience was worth it but tens of thousands of dollars were spent with nothing tangible to show.

Living within your means may be the best way to stop stressing yourself out. It also gives you the opportunity to decide how to best allocate your savings. There have been times when I’ve reviewed a client’s cash flow, finding that much of it is stuck in a non-interest bearing checking account when it could be better applied in a 529 or IRA account.

I’ve also run into situations where the client is unaware they’re well prepared for retirement and could focus on other goals. The lavish travel plans, helping family, or paying for a child’s advanced degree were quite possible. The only issue is they needed to stop funneling all the savings to the retirement-only accounts so these other dreams could be paid for now.

Working with a planner to understand your spending and savings allocation is so important for everyone. POWWOW is here to help and makes it easy with use of their client portal.  Call to discuss your cash-flow, and how the portal can help you track expenses and identify savings.

About the Author

Quentara Costa helps the sandwich generation prioritize kids, self, and aging parents. For years Quentara was the primary caregiver for her father who was diagnosed with Alzheimers at the age of 70. Since his passing she’s become a mother of two sweet girls. Professionally she received a master’s degree in Personal Financial Planning from Bentley University and has held the CFP® designation since 2010. Community involvement includes hosting the Merrimack Valley Senior and Caregiver Group and volunteering for Budget Buddies.

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