When it comes to budgeting for retirement and securing your future, financial educator Tiffany Aliche says automation is the key.
Tiffany Aliche, an award-winning financial educator for women otherwise known as “The Budgetnista,” has one key piece of financial advice: “When it comes to a budget, automation is the new discipline,” she said. “For each aspect of your budget, try to automate it.”
Aliche believes people owe it to themselves to plan for retirement. “If you don’t set aside for retirement, you’re not going to have any money,” she said.
Be kind to your future self
Aliche proposes a thought experiment: re-name your future self and imagine that person in retirement. “My older self’s name is Wanda,” Aliche said. “I imagine Wanda rocking on the porch and think, if I make bad choices now, how will they affect Wanda?”
Planning for your financial future is harder now, Aliche admits. “You used to have one person working in a household making $50,000 a year, and still be able to send your kids to school, buy a car, and go on vacation,” she said. “Now, people make double that and still cannot sustain basic life.” Online social groups are great place to start a financial education, like her own free programs called Live Richer Challenges. Over 800,000 women have taken at least one challenge.
The four stages of automation
But automation is key. Aliche breaks it down into four stages. “First is retirement,” she said. “Ideally, you’d put aside 10 percent or more of your gross income—and more than that for women.” Even if 10 percent’s unachievable now, she says, “Start with 1 percent. Then every six months, call HR and add another 1 percent until you get to 10 or more.”
Second, arrange for automatic payments to your checking account. Third, separate your bill money. “You should have two checking accounts at the same bank,” Aliche said. “One where your money lands, and one where you pay bills from.”
Lastly, automate savings transfers. “Keep your savings in an online-only bank, because most big banks will only give small returns,” she said. Aliche stresses that detailed financial planning is not about wealth. “Money is really not a goal,” she said. “It’s just one tool to achieve your goal, which is really a richer, more fulfilling, more connected, healthier life.”