Retailers have built up Black Friday as a shopping holiday for a good reason: It’s traditionally the date that stores expect to be “in the black,” that is, profitable for the year.
It falls the day after Thanksgiving, so knowing the company will finish the year with a profit is vitally important as the Christmas season looms. Why not kick things off with a big sale, just to get people excited about spending?
Of course, from the consumer perspective, Black Friday is all about the deals. We put off buying big ticket items such as electronics and appliances on the expectation that competition will drive down prices on the most-desired items.
What if there was a Black Friday sale on your own retirement? What if you took the retailer’s perspective and actually set a hard date each year in which you no longer worked to pay the bills and instead worked to ensure your ability to retire on time.
Here’s the thing: Retailers don’t wait until Thanksgiving to figure out if they’re going to make a profit or not. They set a date in order to remind themselves that the race is not won near the end of the course but by the pace you set all year.
That forces them to make choices early. How many to hire and where. What trends to pursue or promote. Cost-cutting where it matters and spending where it helps the bottom line.
You can do the same with your own retirement planning. Ask yourself on Jan.1, how much money do I need to set aside this year to make headway on the retirement plan? How much should I spend on myself instead this year?
What expenses can I trim to ensure I make my monthly or biweekly saving goal? What experiences, travel or consumer goods will I give up to make it happen? Eating out? A new car? Or working more hours?
A personal Black Friday would not be a once-a-year thing but a monthly checkup on progress. You should see your retirement balances climbing steadily throughout the year, whatever your goal may be.
A great way to make sure you get to your retirement goals is by focusing on the cost of investing. Using costly managers can do real damage to a retirement plan. So can chasing stocks or market trends.
The best Black Friday deal is a sale you roll on your own. Chop your mutual fund costs permanently by using index funds. Invest fixed amounts periodically to avoid emotional traps around buying and selling.
And try to relax at the end of the year. Holiday spending is easier if you know you’re well on your way toward making your long-term savings and retirement goals.
Call it peace of mind. Call it a personal Black Friday. Just be sure to take saving seriously and then enjoy whatever comes next over the holidays.