Building wealth as a high-earner can feel both empowering and overwhelming. The opportunities are vast, but so are the choices and responsibilities. Creating and maintaining an actionable savings plan that balances your short-term desires with long-term goals is essential to maximizing your income. This means thoughtfully allocating your resources between vacations, education, retirement, home, and any other priorities you may have. In this blog, we’ll break down how you can create an actionable savings plan of your own.
Create an Actionable Savings Plan
A balanced savings plan is absolutely necessary for sustainable wealth growth, ensuring that while you enjoy the fruits of your labor today, you also secure your financial future. Achieving this balance starts with identifying and prioritizing your financial goals. Common goals for high earners include rewarding yourself with travel and leisure, investing in your or your children’s education, ensuring a comfortable and secure retirement, and purchasing, maintaining, or upgrading your home.
Once you’ve prioritized your goals, develop a detailed savings plan. Start by setting clear and realistic goals. Define what each goal means to you. For instance, your vacation goal might be a trip to Europe every two years, your education goal could be funding a college savings plan for your children, your retirement goal might involve building a nest egg that supports your desired lifestyle, and your home goal could be paying off your mortgage or saving for a significant renovation.
Next, estimate the costs associated with each goal. Research and plan for average vacation expenses, current and future education costs, desired retirement lifestyle expenses, and home-related costs, including mortgage, maintenance, and improvements. Once you have a clear picture of the costs, decide how much of your income to allocate to each goal. For example, you might allocate 20% of your income for vacations, 30% for education, 30% for retirement, and 20% for home-related expenses. These percentages can vary based on personal priorities and financial circumstances.
Automation is a critical step in maintaining your savings plan. Set up automatic transfers to dedicated savings accounts for each goal. This ensures consistent contributions and reduces the temptation to spend the money elsewhere. Your goals and financial situation may change over time, so it’s essential to review your savings plan at least annually and adjust as needed to stay on track.
Balance Short-Term Enjoyment with Long-Term Security
High earners sometimes struggle with balancing short-term enjoyment and long-term security. After all, if you feel comfortable financially, spending money on new cars and fancy dinners might not seem like a big deal. While you should enjoy the benefits of your hard work, do so within the boundaries of your savings plan. Splurging occasionally is fine, but ensure it doesn’t derail your long-term goals. Remember the importance of your long-term goals by visualizing your dream retirement or your child’s graduation day to stay motivated.
Level Up Your Savings Plan
Once your initial savings plan is in place, it’s time to elevate your strategy and maximize your financial potential. One effective way to boost your savings is to directly channel any pay raises, bonuses, or unexpected windfalls into your savings or investment accounts. By doing so, you can increase your savings without altering your standard of living.
Final Thoughts
Building and maintaining wealth as a high earner requires careful planning and disciplined execution. If you need help figuring out where to begin, consulting a financial advisor for personalized advice and help navigating complex financial decisions might be a wise first step. A trusted advisor can help you prioritize your goals, allocate your savings wisely, and review your plan regularly to ensure lasting wealth and fulfillment. Reach out to Grunden Financial Advisory, Inc. to get started.
