The “financial vortex” refers to the set of competing financial priorities and life events that make it difficult for many individuals to save for long-term goals like retirement.
The Struggle to Save is Real
According to the 2024 Goldman Sachs Retirement Survey, 67% of Americans report that monthly expenses, financial hardships, and unexpected events like medical emergencies or family support obligations are the primary reasons they struggle to save. This “vortex” pulls individuals in different directions, making it difficult to stay on track with retirement and other key financial goals.
Five Steps to Calm Your Financial Vortex
Maybe you feel overwhelmed, but you can escape the financial vortex and build long-term financial stability.
Here’s how:
1. Follow the Savings Playbook
Not knowing where to focus is a common feeling for those in a financial vortex. It can be overwhelming when you are pulled in myriad directions with no clear idea about what to do.
Many financial experts recommend a the savings playbook as a way to prioritize how you are using your money.
This approach helps ensure you’re using your money in the most impactful way.
- Start with an adequate emergency fund to cover the unexpected. Emergency savings are the foundation of financial security. Ideally you have at least three months worth of expenses available to help you cover unanticipated events like a job loss, home repairs, or a large medical bill.
- Then you’ll want to save enough in your employer’s retirement savings plan to capture the employer match. This is free money.
- The third priority is paying down any high interest debt you are carrying.
- Fourth is contributing the max to a Health Savings Account, if available to you.
- If you still have funds available, you should contribute the max to an IRA. (Use the Boldin Planner to assess if you are better off saving into a traditional or a Roth account.)
- Next, you will want to contribute the max to your employer plan.
- The seventh step in the savings playbook is to contribute to another after tax account like a 529 if appropriate.
- Finally, pay off low interest debt, like your mortgage.
2. Have a Written Financial Plan
Having a written financial plan is crucial for navigating financial challenges. A plan gives you a clear roadmap and helps you stay focused on long-term goals. The 2024 Goldman Sachs Retirement Survey found that individuals with a written financial plan are more likely to be confident about their financial future and achieve their goals.
A good plan includes budgeting, setting goals, and addressing potential risks, such as emergency expenses or market downturns. It gives you direction and allows you to weather the financial storm without being pulled off track.
Get started now with the Boldin Planner.
3. Start Small with Micro Financial Habits
Big financial goals can feel intimidating, but starting small is key to success.
Adopting micro financial habits—such as saving $10 a week, reviewing your budget monthly, or paying a little extra toward debt—can make a huge difference over time. These small actions, when practiced consistently, help build positive financial momentum without overwhelming you. Behavioral finance research from Duke University highlights how small, incremental financial behaviors lead to lasting financial change.
4. Set Goals and Prioritize Your Future
It’s easy to focus on short-term expenses, but prioritizing your future ensures long-term success. According to the Fidelity Retirement Study, individuals who prioritize their future by consistently saving for retirement are more likely to retire comfortably and on time.
Setting clear financial goals is one of the most effective ways to prioritize your future. Goals give you direction, help you stay focused, and allow you to track your progress. Start by defining both short-term and long-term objectives, such as building an emergency fund, paying off debt, or saving for retirement. Break these larger goals into smaller, manageable steps.
5. Find Opportunities to Save Big
If you want to know how to save more money but genuinely don’t know how to swing it, explore these 23 savings tricks. You are likely to find a strategy that won’t pinch too much. And if you start habits like these, soon enough, they could make a tremendous difference in your retirement.
Use the Boldin Planner to Navigate Out of Your Financial Vortex
The financial vortex may seem daunting, but following a disciplined savings playbook, creating a written financial plan, adopting micro financial habits, and focusing on long-term goals can help you break free. Start small, stay consistent, and always keep your future in mind. By doing so, you’ll navigate the vortex with greater ease and build a secure financial foundation for the years ahead.
Not sure? Try any of these “what if” strategies in the Boldin Planner and see the impact on your future.