Have you ever said of someone, “He means well” or “She has good intentions”?   And though you may leave it at that, there is invariably an implied “But” that follows, usually tempering the praise with the recognition that good motives are not enough to carry the day.

In a recent survey conducted by CFP Board of the saving habits of 1,000 working Americans over 25, there was one group of respondents who distinguished themselves by their “meaning well, but not enough” saving behavior.   Identified in the study as “Concerned Strivers,” these are Americans, typically in their mid to late 30s, with above average incomes, and relatively high levels of confidence and optimism about their financial futures.

BUT – and here’s the big catch – they struggle to make ends meet and are have troubleCFPBoard_ConcernedStrivers_forSocialMedia (002) saving money.  They’ve got good intentions, adequate resources, bright futures, availability of employer retirement plans, yet they feel themselves unable to capitalize on these financial strengths. Only half of this group are saving money on a regular basis.

What’s getting in their way?  The life cycle stage and household profile of Concerned Strivers is a big part of the problem.  Most are parents with children still at home or in college.  And as anyone knows, kids are pretty expensive these days.  According to the “Cost of Raising a Child Calculator” provided by the U.S. Department of Agriculture, the national average expenditure to clothe, house, feed and educate a child up to age 18 is approximately $216,000.  Add on the costs of college educations, graduations, weddings and coming-of-age celebrations, and it is little surprise that Concerned Strivers feel like they can just deal with the immediate needs of their families, rather than saving for a distant future.  This “here and now” mentality is also reflected in the finding that it is credit card debt that is of most concern to this demographic segment. 

In terms of saving habits and financial confidence, Concerned Strivers stand between two other demographic segments identified in CFP Board’s survey:  Confident Savers and Tentative Savers.  (For more on these other two profiles, as well as a fourth segment described as “Stretched Worriers,” stay tuned for upcoming Lets Make a Plan columns or click here to get the full results of the survey).  As these descriptive profile names suggest, there is a hierarchy of saving attitudes and behaviors defining the American public.

For a Concerned Striver, the goal is to start saving regularly, and thereby advance to the status of Confident Savers, who are generally satisfied that they are adequately prepared for retirement as a result of having prioritized savings from early on in their adult lives.

In practical terms, these are the steps toward saving confidence that a Concerned Striver must take:

  • Review household expenditures and categorize all expenses in terms of discretionary versus nondiscretionary, and again in terms of variable or fixed.
  • Take a thoughtful look at those expenses which are discretionary and/or variable, such as family entertainment, vacations, kids’ activities.  It is here where most people can find expenditures which are not strictly required on a month to month basis.
  • Look too at nondiscretionary variable expenses:  food, clothing, and transportation are good examples.  While these represent necessary expenditures – you have to eat and kids wear out shoes at an appalling rate – there is a lot of wiggle room in terms of what you must pay for these items.  Get the kids involved in helping you cutting these costs as a fun, family challenge.
  • Learn to say “yes” to regular retirement savings by saying “no” (at least sometimes) to your kids.  As any parent knows, it is tough to deny children what they think they absolutely must have in order to grow up as normal adults.  Transfer to them the cost of some of the items on their wish list, once they are old enough themselves to begin earning money and start saving.  This even goes for footing the bill for college.  Yes, you want to give your kids the best start in life that you possibly can, but consider the possible costs to them if you run out of retirement savings long before you run out of life.  Think big picture on this issue, and remember that your children can borrow for their education, whereas your ability to borrow money for retirement is very limited.
  • Cut back on credit cards, using them only for convenience and not as a means of financing purchases you cannot otherwise pay for immediately.  Concerned Strivers report the highest angst about credit card debt among the four demographic segments in the CFP Board survey, which clearly means they are overextended.  The review, analysis and reduction of household spending, as well as cutting back on automatic compliance with kids’ demands, may well help in this area.

Last but not least, talk to a CFP® professional to reorient your financial mindset from the urgency of the here and now to a well-considered, long-term strategy for the future.  Your CFP® professional can help you determine how much you will need for retirement and thus how much you need to save regularly.  Having a specific number in mind, rather than worry about a vague future, can go a long way in getting you motivated and confident about what’s to come.