If you get that right, then you can look at what’s left over and see what you can invest or save.
There are also psychological aspects. In fact, Klontz said psychology is the No. 1 factor when it comes to making financial decisions.
Part of the problem is the shame involved with money struggles, said Klontz, the author of a number of books, including “Mind Over Money.”
“A big barrier to moving forward is feeling ashamed because we all know better,” he said. “That shame leads to people wanting to avoid even thinking about the topic.
“Therefore they don’t even get a chance to act on it.”
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He suggests using visualization techniques, such as picturing your ideal retirement and how it feels. By creating a visual representation of your goals, you are more likely to save, he said. In fact, his research found that people who became emotionally engaged increased their savings by 67%, while those who were taught standard financial literacy only increased their savings by 22%.
If you do that and find success, then capitalize on that excitement to automate actions — like automatic contributions to your 401(k) or an auto transfer from a checking account to a savings account, Klontz said.
“The chances are you probably won’t go back and change that because of the status quo bias,” he said, referring to the fact that it takes less energy to keep going then make a change.
“If you can capitalize on that … before you know it, you achieve your goals.“
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.