In 2019, the Wells Fargo Retirement study outlined some of the key statements that connect to the attitudes and behaviors that underscore what having a planning mindset means. These include:
- Setting and achieving a goal or set of goals during the past six months to support their financial lives (a financial advisor could help you set—and stick to—a plan for achieving financial goals).
- Working diligently toward a long-term goal.
- Feeling better about having finances planned out over the next one to two years.
- Preferring to save for retirement now (vs. later) to ensure they have a better life in retirement.
Below, Tim Sturr, Managing Director of Planning at Wells Fargo Advisors, shares three actions that can help you create—or strengthen—a planning mindset and potentially improve your financial well-being.
1. Make a detailed budget
Sturr says the first thing to do as part of developing a planning mindset is to create a budget—and then track what you spend. “Input from a financial specialist could help here,” he says, to make sure your budget is specific and detailed. The more detailed, the better.
A well-thought-out budget includes actions to take to reach short-term and long-term savings goals. If possible, schedule actions so that your savings can accumulate automatically, making it easier to follow through.
2. Create your retirement vision
This relates to a key behavior tied to a planning mindset: preferring to save for retirement now to help ensure you have a better life in retirement.
Creating a complete picture of what you’ll need in retirement involves evaluating the standard of living you want in retirement and being aware of your current wants and needs.
Consider factors such as costs associated with hobbies and activities you might take up in retirement, as well as necessities such as health care costs.
3. Review and update your goals regularly—including now
Sturr suggests you can take action to respond to the economic impacts of the coronavirus pandemic on your assets and income by meeting with your financial advisor. Use the meeting, he says, to understand the market movements now to help ensure your investment plan is still aligned with your near- and long-term goals. This is true even for those who already have a planning mindset.
Also at the meeting, review how much you’re spending, how much you’re saving or investing, and your risk profile to help make sure all components of your plan are aligned with your current circumstances.
When it comes to adjusting goals and investment plans, Sturr cites a Chinese proverb: “The best time to plant a tree was 20 years ago. The second-best time is today.”