A recent study by the American Institute of American CPAs (AICPA) reveals something we already knew – The Great Recession is still impacting the financial decisions of many. The study reveals that more than half of Americans (51 percent) are delaying major life events because of financial concerns. What’s particularly striking is some of the categories listed in the study have more than doubled in the eight years since the survey was last performed.
There are, no doubt, many unknowns in life. We live in challenging times; maybe that’s what makes it easy or comfortable to delay decisions. What often gets missed in the perceived safety of delaying life decisions is the resulting consequences that crop up down the road. Abandoning goals isn’t the answer; adjusting your mindset is.
This may be of particular importance for Millennials, who as a generation, have been labeled as materialistic by some for their perceived higher standard of living than other generations. One survey suggests a better label – the generation with unrealistic expectations. If this is true, it could explain what’s behind the results of the AICPA study.
Set Realistic Savings Goals
The AICPA study revealed something interesting. Nearly half of those polled are saving more money. That’s great! However, you have to examine the purpose of your saving. More specifically, you must assess whether or not your goals are realistic. Are they in line with what you really need or what you think you need?
Take housing for instance; as 22 percent polled revealed they were putting off buying a home.
What kind of home are you saving for? Is it the kind of home your parents had when you left for college or is it a house that’s more suitable towards what you actually need? The difference can be quite significant. If your perception of what you expect in a home is off, it can impact the amount you believe things cost. Some may be waiting to start a family until they do so in a large home with certain amenities. In reality, children aren’t likely to remember the home they lived in before five years of age, so a lower-priced apartment may be just as comfortable and much more attainable.
Your first house doesn’t have to be as nice as what your parents have–that’s why there is the term “starter home”. It often takes people years to be able to upgrade and increase their income, so give yourself some time to achieve a bigger, nicer house. Others might have a feeling of not wanting to start out as humble as their parents did; a shift in perception might allow those who feel this way to view their humble beginnings as a badge of honor instead of an occasion for shame.
By having more realistic savings goals, you can have success without being overwhelmed. Better yet, there is a growing selection of tools, like iQuantifi, that can help you determine how to set goals and determine what actions are needed to reach them.
What Things Actually Cost
Setting realistic goals starts with knowing what things actually cost. This allows you to make a more informed decision and increases your chances of success. Take some of the following major life decisions or purchases into consideration and see how knowing what they cost can help you set realistic savings goals for attaining them:
– Starting a family. The AICPA study revealed that 13 percent of people asked said they were putting off having a family due to finances. We hear that it costs $250,000+ to raise a child. While children are certainly expensive, they don’t have to be and those expenses don’t hit all at once, either. As the saying goes, if you wait until you’re “financially ready” to have children, you’ll never start. In reality, children need very little when they’re young and are not the burden you might think they are.
– Buying a house. Buying a house is, no doubt, expensive. However, take a look at your needs and it’s likely you’ll find they are more modest than you realize. Do some research and find out what the average house in your area costs. Then look to find something at the lower, more affordable end. Use some online calculators to see what you can truly afford as a mortgage payment and then stick to it.
– Purchasing a car. While this was not included in the survey, cars are still a major purchase. With the average new car price coming in at $33,000 this can be an overwhelming purchase. Just like with the house example above, your expectations may not be in line with your needs. If they’re not, this perception gap, rather than a lack of savings, could be the real cause for your delay.
Knowing the actual cost can be immensely helpful in decision-making as putting things off in the short-term will likely only cost you in the long-term.
Get Back to the Basics
If you’re already budgeting and saving money, keep it up. The AICPA study revealed that 58 percent are budgeting and 44 percent are saving. If you’re not, then it’s time, and there are tools to help you start. Starting begins with developing a plan to attain what you want. Some of the basics to include in your plan are:
– Finding ways to save more money
– Looking for ways to increase your income
– Having realistic expectations of what you need and what things cost
– Prioritizing the goals you’re working towards
The goals you’re working towards don’t have to be large, but they do have to be quantifiable so that they can create momentum to carry you to where you want to get.
It’s easy to think we need to have everything now or that delaying things will help us in the long run. Everyone is also entitled to their own opinion about what they should have, but when that opinion causes you to delay life goals or miss them entirely, your perception may need to be reevaluated. Most of the time, having a correct mindset, a solid plan and the commitment to carry it out are all you need to set yourself up for greater success in life.
By John Schmoll, Staff Writer