When it comes to preparing yourself financially for the future, it’s imperative as a Baby Boomer that you have the right mindset going in. You can have all of the riches in the world and yet have it slip through your fingers if you are not careful. As unfortunate as it may be, there are millions of people who have an affluent lifestyle that quickly vanishes in retirement because they went about it the wrong way.
Many people get the money-making part of finance right but seldom do they get the saving and planning part down as well. Those who manage to get all three fully figured out end up being the ones who live wealthy lives throughout retirement. Even if they didn’t make millions, they set themselves up to live like millionaires each and every day.
This blog post will cover some of the principles of a financially beneficial mindset that Baby Boomers need to adopt if they are going to be financially successful through the entirety of retirement. You may think to yourself, “I already know some of this stuff.” But chances are that you are not DOING all of this stuff. If you happen to be one of the few who are, great! The guide will serve as a fresh reminder to keep doing the things that have kept you successful up to this point.
Financial Mindset Tip No. 1: “I am realistic with the money that I am earning AND saving”
This means that you are honest with yourself about how much things will cost and whether or not you have earned and saved up enough money to afford them. This can be challenging to do all in your head, so it’s wise to track each and every dollar you spend in a budget. Paper and pen or on your computer is fine as long as you have a place where you can consistently manage your finances.
Being realistic with your money means that if you have a recurring expense that you are paying, such as healthcare costs each month, you know what it will cost based on your spending patterns and if you have the money to pay for it in your retirement years. It also means that you are honest about what you are making per month. In other words, you are not dependent on any bonuses or similar financial earnings that are not guaranteed. Until that money is directly deposited in your bank account, you cannot be 100-percent certain it you arrive as expected.
Many Baby Boomers tend to take extra risks with their investments in the stock market and end up projecting their income based on this. In many cases, this can backfires and they end up with a much lower amount than they thought during their “golden years.
Financial Mindset Tip No. 2: “I am in complete control of where my money goes, and I stop and think before making any large purchase”
One of the biggest problems with spending money is the fact that an overwhelming majority of decisions are based on emotions and feelings at the moment of purchase. Rarely are purchases based in fact and logic.
This is where the often-heard advice of distinguishing between needs (necessities) and wants (luxuries) tends to come in. Before you make any large purchase, stop and think. Perhaps even sleep on it so you can really think about whether you REALLY need this item that you are about to purchase. If it is not absolutely essential for you to survive, chances are that it’s a “want” and not a “need.”
This is not to say that you should not have any fun with your money at all. If you have budgeted yourself accordingly, paid off your expenses and bills, put money away for retirement, and have something leftover, there’s nothing wrong with modestly rewarding yourself on occasions. However, please remember that during your retirement years you will be living off the money you have saved and earned from the previous years. You are not earning any money during retirement, and you will have to be wise with how your money is allocated. It is wise to have good habits automatically installed and any unhelpful impulses removed before you enter retirement.
Financial Mindset Tip No. 3: “I pay off my credit in full each and every time, and ON TIME”
It goes without saying that you should be seriously avoiding or getting out of any kind of credit card debt and loans at this stage in your life. The major downside about credit card debt is the interest that accumulates on unpaid debt over time. It snowballs into an amount that scares most people and leaves them wondering how things got so bad in the first place. Instead of putting your hard earned money towards savings and retirement funds, it gets wasted on paying off debt!
A harsh yet wise truth to remember is that if you cannot pay for it in available cash, then you cannot afford it. With very rare exceptions, you should be using cash to make all of your purchases.
Additionally, you also want to make sure you know your credit card contracts like the back of your hand. Read the fine print and ensure that you know what happens should you fail to make the proper payment on time. This sounds like incredibly basic advice, but you will be surprised at the number of people that still struggle with credit card debt.
Conclusion: If you can successfully incorporate these three mindset tips into your daily financial planning and spending habits, you will be mentally equipped to take on the retirement phase of your life. You will no longer have to worry about whether you are ready to handle it because you have already set the foundation with good habits and a mindset to match!