This One Thing Could Be the Key to Retiring Rich

By Annie Mueller on 29 September 2017 0 comments

Writing things down is a powerful exercise. Productivity experts and personal growth coaches have long known this truth, and frequently promote writing down goals and priorities as a way to take control of life and achieve more. Does the power of writing apply to your financial life, as well? Turns out that it does in a very significant way.

Written plans lead to more retirement savings

A recent report from Charles Schwab makes it clear that writing down your financial goals can have a huge effect on how well you do in reaching them. According to the report, people with a written retirement plan are almost twice as likely to increase their 401(k) contributions and rebalance their portfolio. And that's not all a written plan can do for you: You're also twice as likely to stick to your savings goals if you've written down your plan.

Despite the obvious power of a written financial plan, most people don't have one. According to the Schwab report, even though about two-thirds of Americans have a financial plan, only a quarter of us have that plan in writing.

Is it really a plan if it's not in writing? Maybe, but it's certainly not as powerful.

Writing things down makes them seem more real and helps you understand clearly how to reach the goals you're setting. A survey from Wells Fargo found that folks with a written retirement plan felt much more secure about reaching their financial goals for retirement. It isn't that the amount needed for retirement changes, but that a written plan helped these individuals understand exactly what they needed to do to reach their retirement goals.

Start getting your plan on paper

How do you get your financial plan written down? Start simple and start right now: Get a piece of paper or open up a computer document, and start writing down your goals. Focus on three main areas: an income goal, a budget goal, and a long-term savings goal.

The key is to just get started and remember that you can adjust your plan as you gain more information. Until you have everything written down, you don't really know what you're aiming for or if your goals are even possible. (See also: Half of Americans Are Wrong About Their Retirement Savings)

Get some professional help to improve your plan

Once you've gotten some basic ideas down on the page, consult a professional financial adviser to help you turn those basic thoughts into a viable financial plan. Over two-thirds of the people who do have a written financial plan got help from a financial professional.

Getting professional help is a good idea for two reasons: First, it helps you to actually finish that plan you started. Second, having professional advice will result in a better financial plan. An adviser can help you ask questions, look at issues, and develop solutions you might have missed on your own. (See also: 7 Things Financial Advisers Wish You Knew About Retirement)

Turn your plan into actions

Once you have your plan written down, you need to translate it into regular actions.

For example, if you set a savings goal that you want to meet in five years, you'll divide that into a monthly savings amount. Now you have a monthly savings target (and we know that, with a written plan, you're much more likely to reach it). When you turn the goals on your plan into actions, you can quickly assess whether you're making progress or not.

Automate your financial actions

As much as possible, automate the actions that you derive from your financial plan. Set up automatic transfers into your savings account, for example, or have a certain percentage of your paycheck deposited into your savings account rather than your checking account.

Those small automations take the work out of reaching your financial plan. The easier you make it on yourself, the more likely you are to stick to your plan. (See also: 5 Ways to Automate Your Finances)

Review your financial plan regularly

A written plan is not a static thing, so you need to review it regularly and adjust it as needed. Perhaps you get a salary increase or an unexpected windfall; how will you apply it? Review your plan, decide where to apply your wealth increase, and adjust your plan as needed.

It's a great idea to set an annual appointment with your financial adviser; you can use that time to review your plan together. Then you can apply that professional insight to any adjustments you make to your plan, and move forward with even greater financial efficiency.

Like this article? Pin it!

This One Thing Could Be the Key to Retiring Rich

4.5
Average: 4.5 (2 votes)
Your rating: None
ShareThis

Disclaimer: The links and mentions on this site may be affiliate links. But they do not affect the actual opinions and recommendations of the authors.

Wise Bread is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.