Secure Your Future With Money You Didn’t Even Know You Were Spending

Over the last five years, I’ve spent a lot of time traveling the world to talk to people about money. At least one common theme comes up again and again: anxiety. People are worried about the future and want to know what they can do to prepare themselves for a stable financial life.

As we shift away from collective retirement solutions like government programs and company pensions, greater responsibility rests on each of us to create our own plan. After hundreds of these conversations, I’ve come up with a strategy. It could just be the secret to the financial life you have always wanted. But before I share it, there are a couple of disclaimers.

First, it’s boring. I’ve tried over the years to make financial planning more exciting, but I can’t seem to do it. Some people on TV try to increase the excitement by yelling things like “Buy!” or “Sell!” What does work, however, is relatively dull. I compare it to watching an oak tree grow. It’s short-term boring, but long-term exciting.

Second, it’s hard. We’re talking about saying no to things we really want right now in exchange for something we will absolutely need many years later. That’s not what most people do. Most people buy things now because, of course, they deserve it. Eat, drink and be merry because tomorrow you die, as the old saying goes. But here’s the thing: If you think saying no today is hard, try eating cat food for the last 10 years of your life.

So the first thing you will need to do is embrace boring and hard things. In fact, with this plan, you may even come to love the boring and hard. Assuming you’re still with me, let me reveal the Sketch Guy’s very unexciting, four-step plan to the financial life of your dreams:

Step 1: Pay attention to your spending.

Call it budgeting if you want, but I’m essentially talking about paying close attention as you spend money. This could be as simple as keeping an index card in your pocket to write every transaction on, or purposefully reviewing your monthly credit card statement. Whatever your method, just start noticing how you are spending money.

Step 2: Find wasted money.

The hard part of saving isn’t saving itself. The hard part is finding the money to save. Not long ago, I figured out a routine that helped. I printed out my credit card statements and went through each charge.

On one statement, a few lines down on the second page, I found a charge for Gogo Internet service. That’s the Internet service available while flying on many airlines. I recall the charge being $39 a month for unlimited access. (Now, it’s $59 a month.) After highlighting the charge, I leaned back in my chair, deep in thought.

How long had it been since I had last gone online at 35,000 feet? In a moment of Zen-like clarity, I realized I hadn’t even been on a flight that month. I did the math and discovered it had been 13 months since I had used this service. For 13 months, I had been paying for something I wasn’t using. I had wasted more than $500. It’s crazy that I let it go on for that long, but I’m glad I found it.

Step 3: Automate savings.

If anything about this plan qualifies as exciting, perhaps it’s this: By canceling my monthly GoGo charge, I found $39 a month to start saving. Because I was already spending that money, it wasn’t even going to hurt. All I had to do was log in (not at 35,000 feet) and set up an automatic investment for $39.

I could even round it up to $50. Don’t get hung up on finding the best investment. That reeks of excitement, and we’re not into that. Just start something boring like a Vanguard Standard & Poor’s 500 index fund, or send the $50 to your children’s 529 education account. The important part is automating the behavior: Have the money transferred regularly from your checking account into whatever boring savings or investment vehicle you decide. No stamps. No envelopes. No will power.

Step 4: Repeat.

At the risk of making this plan sound like fun, what if you decide to turn it into a game? Kind of like a treasure hunt.

Every month, pull out your credit card statements and carefully take notice of every charge, look for wasted money and add it your automated savings. See how often you can move that number up. See if you can start a streak and raise the amount each month, even if it’s only by $5 or $10. It may sound dull to save $39, then $50, then $65 or even $67 (those two dollars matter) — but over time, those dollars add up. How high can the number go?

Some friends of mine played this game. They paid attention to their spending. They found wasted money. They automated their savings, and they repeated their actions for longer than a decade.

When they started, they had a goal of turning these incremental savings into $1 million. I remember thinking that goal was crazy. They would need to do something exciting like find a hot initial public stock offering or invest in the best mutual fund ever to make that work.

Then one day, I got a call. “Carl,” they told me, “we did it! We just crossed the $1 million mark.” Yes, it took more than 10 years of consistently doing boring things, but they reached their goal. It turned out that it wasn’t as hard as they thought because they had a plan. They automated the good behavior. And one morning, they got to be really excited about having $1 million in savings.

This commentary originally appeared July 20 on

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© 2015, The BAM ALLIANCE

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Carl Richards, CFP®

Carl Richards is the creator of the weekly Sketch Guy column in The New York Times and is a columnist for Morningstar Advisor. Carl has also been featured in The Wall Street Journal, Financial Planning, Marketplace Money, The Leonard Lopate Show, and His simple but meaningful sketches served as the foundation for his first book, "The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money."

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