How to save and invest for the life you want

Let's be honest: Saving and investing may be necessary, but they often can feel like a chore.

Both become a lot more rewarding, however, when you think of them as more than just spreading your money across different investment categories, such as stocks and bonds, to fund a seemingly far-off, no-guarantees future.

"We obsess over investment allocation, but we don't spend much time thinking about other allocations," said Christine Benz, Morningstar's director of personal finance and retirement planning.

Benz encourages everyone to focus on what she calls your "time on earth" allocation. That is, think about what is important to you and what you really want to spend more of your time doing -- not just in retirement but today and in the foreseeable future.

It could be that you want to travel to be with your aging parents more often. Maybe you want to step out of the workforce for a few years to be home with your kids. Or leave a well-paying job that sucks you dry for one that is less lucrative but more fulfilling.

Or maybe you just want to take a bucket-list vacation abroad.

"Hitting short-term and intermediate goals is so powerful," Benz said. "For a lot of people [saving to buy] a first house is a catalyst for getting their whole financial life in order. You need to see a payoff."

That's especially important for young adults, she added. "People in their 20s and 30s don't identify with their 65-year-old selves. ... It's important to articulate shorter term escape hatches."

Meeting your 'time on earth' goals

Spending more of your time in ways that are important to you is the goal. Setting up your finances to support that goal can transform saving and investing from fulfilling an obligation to creating a financial freedom fund for yourself.

Here are three key ways to get started:

Figure out how you are allocating your income between spending and investing. "How are you deploying your income stream? Are you making smart decisions to deploy that capital across your financial opportunities?" Benz said.

For instance, she suggested, would it make financial sense to prepay your mortgage -- something that can save you a lot of money over time if your current mortgage rate is higher than the return your extra payments could earn if you parked them in a conservative investment vehicle like a CD.

For a shorter term boost -- say, paying for a splurge vacation, saving for a second home or even funding a longed-for sabbatical in a few years-- it may be okay to buck convention, Benz suggested, especially if you have a long time horizon to retirement. Instead of maxing out your 401(k), you might reduce your contributions a little and redirect that money to a taxable brokerage account.

"While there are no tax incentives to contribute to a taxable brokerage account, there are no strictures on withdrawals either, and gains are taxed at today's fairly low capital gains rate," she said.

Consider tradeoffs. "We make so many decisions that are time-money tradeoffs," Benz said.

It could be a decision to hire a housekeeper versus doing everything yourself. Would it break the bank to get some help if it frees up your time on weekends to be with friends and family? Or do you get satisfaction from cleaning and saving money?

Or it could be a more expensive decision, such as deciding whether to buy a bigger home with a lot of upkeep versus a smaller one. Do you need to live in as large a house or will a smaller home nearby work just as well for you?

Does your well-paying job leave you little time for anything else? If not, are there other opportunities that could still fund your needs without taking such a big bite out of your life?

Look for ways to cut back now. Yes, a budget can be annoying. But if it helps free up cash by reining in your current spending on things that aren't really making you happy, it's worth a shot.

"Identifying spending cuts is the richest vein for most people," Benz said. "That could support your decision to move to a lower paying job or retire earlier."