Can you buy your daily cup of coffee without the dollop of guilt? Yes, and here’s how

When it comes to building your financial foundation, you can have your cake and eat it, too.

Throughout my young adulthood, undergraduate days and early professional career I have been overwhelmed with the number of times that I have heard individuals preach, “If you didn’t buy that cup of coffee every morning you’d have ‘X’ amount of more dollars at retirement” or, If you didn’t eat out three times a week you’d save ‘X’ amount a month that could be reallocated toward paying down debt.”

While both statements are valid and truthful, I don’t believe they are a realistic approach to helping build the basics for your long-term financial well-being.

As I often preach, there will always be the most mathematically efficient way to achieve a financial goal, but that doesn’t mean it’s the right choice for you.

As with any long-term goal, the hardest part of achieving that goal is simply starting to build good habits that will help you reach it. When it comes to our financial goals, this same hurdle of “Where do I start?” often stands in the way.

When most individuals sit down to evaluate their long-term financial goals, they are often guided to review their past three months of spending to eliminate any “wants” that aren’t seen as “needs” and to reallocate those dollars toward savings for their long-term goals.

While this process may work for some individuals, if you are like me, creating a budget and eating beans and rice every day to save some extra money doesn’t sound that exciting. Why work hours upon hours to not enjoy your life?

I believe the root of the problem in beginning to build the basics for your long-term financial well-being is that it seems difficult. Let’s be realistic: Who wants to spend time building out an Excel spreadsheet to track expenses? Most people don’t want to be told they can’t enjoy their well-deserved earnings.

What if, instead of focusing on the past, we instill good habits moving forward, all while still enjoying our hard-earned cash?

If this sounds intriguing to you, it’s time to throw away your budget, simplify your life and start creating life-changing habits while enjoying yourself.

Instead of creating a detailed budget that outlines each transaction you complete, I prefer the spending plan approach, which allocates your earnings into three buckets: needs, wants and savings.

A spending plan could look something like this:

▪ 50% of take-home pay goes to needs

▪ 30% goes toward wants

▪ 20% goes to long-term savings/retirement

These percentages may vary depending on your own financial goals. However, we just simplified a tedious budget spreadsheet into a three-bucket spending plan that allows you to always know how much you have available to spend on enjoying your life while still setting you up for long-term financial well-being.

Now, how do we simplify this process more? Well, let’s automate it.

Through working with your employer or setting up systematic transactions with your bank, you can set up automatic sweeps, or deposits, to help make your life easier.

For example, you could set up two checking accounts, one in which 50% of your take home pay will be deposited for your needs and one in which 30% of your take home pay will be deposited for your wants.

Additionally, depending on your income and employer, you can directly deposit the 20% of your take home pay into a long-term savings account, 401(k) or Individual Retirement Account.

With this process automated, you can pay your bills out of your “needs account,” fund your coffee or dining out of your “wants account” and start building your retirement nest egg through your savings account, 401(k) or IRA.

Before you know it, and with little thought, you will be building the basics for your own long-term financial well-being while still enjoying that daily cup of coffee.

Jack Giardino is a CERTIFIED FINANCIAL PLANNER professional and director of communications with the Financial Planning Association of Greater Kansas City. He serves as an Associate Wealth Advisor for Mariner Wealth Advisors in Overland Park.