Saving for major purchases can feel daunting, especially when many Americans struggle to make ends meet from one paycheck to the next. However, financial experts argue that with the right mindset and approach, even those on tight budgets can work towards big financial goals.
Shannon McLay, CEO of The Financial Gym, suggests that the first step is to overcome the intimidation factor of large numbers. While saving $100,000 for a home down payment may seem impossible, McLay encourages people to view financial health like training for a marathon – it’s a gradual process that builds over time.
“The process of getting financially healthy is like running a marathon,” McLay explains. “If you decide to run a marathon today, you’re not going to run 20 plus miles today. You’re going to do training, you’re going to do a little bit at a time, and then you’re going to build up.”
This marathon analogy underscores the importance of patience and persistence. Just as a runner alternates between periods of exertion and rest during training, savers may find themselves making progress in fits and starts. The key is to keep moving forward, even if progress feels slow at times.
McLay emphasizes the importance of having a clear target to work towards. Setting SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals is crucial when saving for major expenses like buying a house, starting a business, or planning for retirement. By defining exactly how much money is needed, savers can break down their ultimate goal into more manageable milestones.
“Know what the number is, though, because we need to know what we’re working towards,” McLay advises. “SMART goals are everything, so we need to know how much the house costs, how much the business will cost, how much retirement will cost, and then start putting the pieces together to get to those numbers.”
While the prospect of saving large sums can be overwhelming, McLay’s approach focuses on making the process less intimidating. By reframing savings goals as long-term projects rather than immediate challenges, individuals can approach their financial objectives with less anxiety and more determination.
This mindset shift is particularly important given current economic realities. With reports suggesting that over 70% of Americans live paycheck to paycheck, the idea of setting aside substantial amounts of money can seem out of reach for many. However, McLay’s strategy emphasizes that even small, consistent efforts can compound over time to yield significant results.
The marathon analogy also serves as a reminder that financial progress, like physical training, often involves setbacks and challenges. Just as a runner might face injuries or motivation slumps, savers may encounter unexpected expenses or periods of reduced income. The key is to view these obstacles as temporary and to stay focused on the long-term goal.
Experts like McLay encourage savers to celebrate small victories along the way. Each milestone reached, whether it’s saving the first $1,000 or reaching 10% of the ultimate goal, represents progress and should be acknowledged as such. This positive reinforcement can help maintain motivation over the long haul.
While saving for major purchases requires discipline and patience, financial professionals emphasize that it’s an achievable goal for many, regardless of their current financial situation. By adopting a marathon mindset, setting clear targets, and remaining committed to the process, individuals can work towards their financial aspirations, transforming seemingly impossible goals into attainable realities.