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Fight natural tendencies to save funds successfully

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by Eric T. Kurth

for the Business Journal

Natural foods, natural fibers, even natural lighting in building construction yes, "natural" usually is meant to be what lifestyle maven Martha Stewart would call "a good thing." But when it comes to natural tendencies in saving and investing, the best advice might be, "Fight the urge."

Human inclination to "don't worry, be happy," make decisions solely on emotion and put off involved tasks as long as possible doesn't serve a financial future very well. On the other hand, replacing these natural tendencies with just a reasonable amount of structured planning can often produce a financial outlook that's quite healthy.

What to avoid. Overcoming the natural disposition to think in the following ways can sometimes be an important key to successful long-term financial planning.

?The future will take care of itself ... somehow. The future inevitably will come to pass, and you'll need money to pay for it.

Ignoring your future needs (retirement, college for the kids) won't make them go away. Acknowledging your financial needs is the first step to meeting them.

?Time is on my side. Actually, time is on your side ... but only if you use it. It's great to have several years to deal with the long-term financial needs you identify. But this does not mean taking up the challenge of paying for college just as high school diplomas are being awarded.

Investing now, even if it's only a little every month, can make a significant difference in reaching long-term investment goals. Consider an automatic investment plan so as to avoid procrastinating. Every day counts; starting a little later than perhaps you could have is still preferable to never getting off the mark.

?I'll strike when the time is right. Cherry-picking investments that seem great in the moment seldom works over the long term. Most successful investors establish their financial goals and willingness to incur risk first, then select investments that match those goals.

If your goals are long-term, then it makes sense to select investments designed to perform over that time frame. Historically, market performance shows the biggest mistake is not jumping on an investment too late, but pulling out of the market too soon.

Most investors find success in a thoughtful, long-term investment strategy that maintains focus, commitment and patience.

?I gave it the ol' college try, it just didn't work out. Own a house? If you'd dwelled on that dollar amount on your mortgage document the one required by law, the one that shows how much you'll pay over 30 years you'd probably have determined that camping outside forever might be fun for the kids!

The numbers for retirement, college and other long-term goals are high ... but they're not numbers you have to deliver immediately or in one lump sum. Don't give up. Attacking these goals a little at a time, but on a regular monthly basis, makes them a lot more achievable.

Like rivers, people take the path of least resistance. But for saving and investing, doing what's counterintuitive is often what's best. And all those things you'd like to do, but shouldn't not worry, put off the hard stuff, take your time?

Well, the irony is that fending off the feelings and not doing those things now will better enable you to do them later when you're more financially secure.

(Eric Kurth is division sales manager for Waddell & Reed in Springfield.)

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