You’ve heard the horror stories, and I bet you’ve even seen them for yourself. I’m talking about the grandparents and their friends who struggle with their bills and try to make ends meet during a time in their lives when they should be happy. You think to yourself that it’s not the life you want to live. You want better. You want more. But that means putting away money now for retirement to make sure you have what you need for the basic necessities in life, for doctors’ visits, and even your travel plans.
The retirement years are called the “golden” years, but very little about them can be “golden” when it comes to money. Are you up for it? Here’s how to start:
Where Can You Cutback?
Cutbacks can be made everywhere. Little tweaks in the things you do now can result in great savings that you can put away for later.
How much do you spend on food?
- Are you buying in high-end stores? Some of the bulk and off brand stores carry the same quality as the large chain stores.
- Are you buying brand names where they’re not necessary? (We all know not all cream cheeses are created equal, though.)
- Are you utilizing coupons? Are you using everything you have in your pantry before buying more? Do you eat out often or in expensive restaurants?
Analyze your food budget to see where you are spending more than you need to. To realistically make this work, you don’t want to rid yourself of every luxury that you have now. You’ll only end up resenting taking this on. So, set yourself a realistic goals and follow through with them.
What about your home?
Is your home bigger than you really need? Does it require a lot of upkeep? Is it energy-efficient?
When you get older, you’ll downsize in order to be able to maintain your home on your budget. If you do that now, you will take a man-size bite out of your home and home maintenance bills. Of course, this means to live with what you can live with. Not many families NEED a mansion. Consider a smaller house by trimming the extras and making do with only what you need.
Get rid of your debt NOW.
Do everything to get your debts paid off ASAP. This will be the greatest asset that you create for yourself.
One of the best ways to pay off debt is by using the snowball method. Here’s a brief explanation of how it would work with your credit cards:
- Decide to pay one card (either the high interest or the the lowest balance) off while making minimum payments on the others.
- When that card is paid off, add the payment you were making to it to the next card you want to pay off and continue to pay the minimum on the rest.
- Repeat until you have all you cards paid off.
The Benefits Package
Benefits of living this lifestyle stretch far beyond the cushioning of your actual nest egg, as you will set a great example for your children too.
Your kids will learn:
- To budget money better for their families later
- Self-control when it comes to purchases
- Not to live beyond their means, sparing them the stress of credit cards and being in debt later
The key to making this lifestyle work with children is your attitude. Present the way you live to them in positive light and don’t begrudge them when it counts. Your attitude towards them and the way you live can greatly impact their perception of these sacrifices and can really make a difference when it comes to money management for their families.
Imagine that you could actually to teach them not to follow the crowd and enjoy living within their means. Just imagine.
Many people spend their golden years worrying about their money. Spare yourself that headache and live on less now. Use that extra money to actually make retirement your “Golden” years.
Where can you make the most significant cutbacks in order to save the most money now?
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{ read the comments below or add one }
The main Key to all these frugal cutbacks are, to be certain to use the savings realized to invest for retirement, whether in an IRA, 401k or other investment. Without doing that, the savings may ultimately be spent.
My employer automatically takes out of my check what I set as my % of pay each paycheck for my retirement. I work with what is left in my check to pay my bills. When I cut back on my expenses, I give my employer authority to withhold more (up to limits set by the government for IRAs, etc.
Be sure to have an emergency fund set aside. You don’t want to be dipping into your retirement to cover an emergency or short-term unemployment
Simple is, simple does.
The mortgage is most people’s largest expense and therefore needs to be looked at when trying to save moeny. Buying a smaller house or taking a smaller loan (or even refinancing) can save thousands upon thousands of dollars.
People should also look at saving for their kid’s college education. I’m not implying you shouldn’t help out your kids, but there are options for them – loans, scholarships, community college – to pay college expenses. These aren’t there for retirement. Save for retirement first.
Lastly, one can always find ways to increase income along with cutting back to help fund retirement.
A debt-free person is usually a happy person; there’s no reason to give the banks your hard earned money
My biggest expense after the mortgage are all the insurances. If you add up the car insurance (2 cars in our household), home insurance, health insurance (3 people), and life insurance (I want to make sure my son is taken care of if something happens to me), it totals to quite a bit more than my car payment, which I think is pretty high. I hate the idea of insurance in general and have for a long time, but realizing how much of my paycheck actually goes to making some company really rich is just sickening and even worse is realizing that there is nothing I can do to cut back on it. It’s not like I have expensive coverage – we removed comprehensive and collision coverage for the car we don’t owe any money on, health insurance has a high deductible, and I have a combination of a higher term life and a smaller whole life policies. I’ve made smart choices regarding insurance, but it still eats up so much of my income, it’s disheartening.
I do agree with being frugal though and buying generic brands when possible (and checking the per unit prices to make sure it’s cheaper). I would also suggest having money automatically deposited into a retirement account (whether it’s a Roth one on your own, a traditional through the employer, or both), then you can just consider that as one of the mandatory expenses.
Couldn’t agree with you more, KM. Insurances are now more than my mortgage and rising.
Premiums on all insurances here in Australia have almost all doubled (exception is life insurance) in the past 12 months due to all the extrordinary weather events occurring here. Yesterday we were informed via an insurance governing body that we (Aussies) can expect further rises next year due to further flooding across 3 states currently. – I can foresee many families will be having to opt out of some insurances so as they can pay others and some may not pay any insurance (including health) as paying insurance becomes so expensive and only available to those on very high incomes.
I am hoping to downsize my home in next 18 months and thought I would be able to reduce the cost of home insurance and possibly vehicle insurance by moving to an area which is better rated by insurance companies in terms of premiums – but there is a catch 22 – these areas are also more expensive to live! A no win situation really! However, downsizing in itself may bring a small reduction in home and contents insurance. My vehicle – well I am not so sure and need to enquire – I am driving a medium size SUV – a smaller car might be cheaper to insure.