Are you dreading retirement? Are you afraid of being a bag lady? I can help. Being poor young is not fun. Being old and poor sucks. Saving money for retirement is essential.
I don’t mean retirement per se but is the fear that you will be poor because you have not been saving money keep you up at night? Or have you been distracting yourself and avoiding looking at your finances and financial future hoping for some miracle?
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Have you saved enough? Did you take time to calculate how much income your nest will provide ? Did you take into account the factor of “inflation”? Do you dream of a quiet retirement lifestyle or are you hoping keep the same lifestyle and to travel extensively?
You know that “hindsight is 20-20? Nowhere is this more true than when we talk about saving money. When you reach retirement and wish you had been more diligent about where to spend, because you look at your retirement options and see how you could definitely use a couple more hundred thousand dollars in your retirement fund right now.
I know. Saving money is not easy. (But the following 35 tips will help you). I don’t find it easy to save money, whether it is to stay on budget at the grocery store or pass by those gorgeous clothes and shoes and say to myself “NO”. Neither do I find it easy to stay in a smallish apartment and not move to a more modern and larger place.
It’s not easy to save money when you are making little and it’s not easy when you are making more and you “can suddenly afford” to buy all those toys you have been eyeing, and you can keep up with your friends who live the high life, or the Jones.
The reason it’s important for being frugal and for saving money is so that you don’t find yourself with a big drop and income and lifestyle when you are ready for retirement. It’s because you may not want to send your future self to work for another few years when you yearn for retirement.
My vision of frugal and saving money is to ensure peace of mind, now and in the future. It’s to make sure you are not part of the 47% of the population who is $400 away from not being able to pay the rent or buy food this month.
My vision of frugal is to have enough money not only for emergencies but to take advantage of opportunities, like stocking up the pantry when your favorites are on special; like buying what you really need without stressing about it; like treating yourself and paying cash for it. Like not spending another minute worrying about not having enough.
My vision of frugal means to clarify what is truly important and making choices accordingly. It means passing some things to have money for what really counts for me and ensure I don’t end up in the poor house.
One more reason for adopting a frugal living lifestyle is that if life should send you a curve, a debilitating illness, disability, it will be a lot easier to adapt to this if you have taken the habit of restraint.
There is a lot written about how many of today’s kids who are brought up like royalty have a much tougher time to adapt to life when the going gets tough. Same goes for adults. Take frugal living as practice “just in case”.
If you are already retired, there are changes you can make to make the most of your income, or increase it which I will write about in a future post.
If you are still a few years away from retirement, here is your chance to improve your financial future and ensure a more comfortable retirement.
Look at these 35 tips, gathered from retirees who wish they knew then what they know now, about saving money . Start implementing some of the ideas to make your retirement a little or a lot more “golden”. Cheat sheet: you can blow your very first paycheck!!
1. It’s OK to blow your first paycheck on whatever you want because that’s the last time it will happen.
2. Because starting with paycheck No. 2, you need to start saving regularly. If you are way past your 2nd paycheck, then it starts today.
3. Write down your financial goals where you see yourself in 5, 10, 20, 30 years. Write down the amount you think you will need to achieve your goals. Do you want to buy a home, start a business, travel, marry, have children, help a family member to get an education? Help your aging parents? Remember to factor in inflation. I can tell you that I never believed inflation would make the house I purchased in 1982 for $31,000 would sell today for $300,000+. If you are parent to a teen, teach them to write down their financial goals. That’s probably one of the best gifts you can give them. (And teach them about inflation).
4. Read a few good books on personal finances and again, if you have kids, encourage them or pass the information. Here are some great ones:
5. Make a spending plan every month. This is sometimes called a budget, but I prefer spending plan because it puts you in charge of deciding where you choose to spend your money, according to your priorities and long term financial goals. It’s important to do it monthly – you may decide to cut spending in May because you know that June is graduation day for someone in the family and that will entail some extra expenses.
6. Save to pay cash for big expenses (fridge, car, holidays) and smaller ones too. There used to be a system where you put clothes on “lay-away”. You put a deposit on the article of clothing which the store kept aside, and when you had saved enough money, you would pay it in full and then take it home.
7. Learn to bargain to get the best price on car, appliances, etc.). If you don’t ask you don’t know. Take a chance.
8. Participate in your 401K or other employer retirement plan to the maximum because your employer matches your contribution.
9. If you don’t have a 401K or other employer plan, start your RRSP or IRA, or Roth IRA, and contribute the most you can. The younger you are when you start, the greater your chances to become a millionaire. Arm yourself with knowledge to see which is best for you depending on your income and circumstances.
10. Invest in your education. Upgrade your skills for your current job or take classes to acquire skills to start a new career. That’s what I did when I went to University full time to get a B.A. and continued part-time to earn my M.A.
11. Investigate how you can start a home business, apart from your day job. Do you have skills that can be monetized? What about direct selling, or multi-level marketing. I remember my Avon lady many years back. She was about 71 and was rocking retirement with her Avon business which afforded her to spend winters down south. Or you can offer services: babysitting, dog walking, tutoring, etc. Even just 5 hours a week, at $10 – $30 an hour, can bring an extra $200 -$600 a month
12. Look at starting an online business. A blog, like this one or an Amazon FBA business (Fulfillment By Amazon), Etsy boutique? Depending on your skills, the possibilities are endless
13. Save money shopping. Become “frugal”, another word to say get the most for your money. Stock up on non perishables when they are on special
14. Buy meat, fish when on special, cut up in portions and freeze
15. Learn to cook and bake. It’s a lot less tempting to eat out when you know you can make better at a fraction of the cost of a dinner out. Reserve dinner out for food that’s not easy to make at home. My favorites: Chinese and Thai. Baking a cake or a raspberry pie costs about a quarter of what it would cost at the Pastry shop. Bonus: it’s easier to eat healthy at home.
16. Keep your receipts. They can come in handy if something breaks or you need to return it and in the meantime you can get a picture of how much you spend in each category
17. Write down everything you buy. Yes, even groceries. Tally it at the end of each month and re-adjust if that’s not honoring your financial plan. Sometimes this past winter I started keeping track of all the groceries I buy and I was surprised how this has helped me avoid impulse shopping
18. Learn the difference between a need and a want. You need food on the table, you don’t need another dress, or a holiday in the Carribean
19. When you get a raise or a bonus put most of it into increasing your savings, emergency fund, IRA, TFSA
20. Create a life you love. Find work you love and a good match for a life partner. Retail loves unhappy people. They shop more
21. Buy used when possible. A car loses 20% + of its value the minute you drive it off the lot. Finding a barely used car is another way you could be saving money.
22. Buy good quality where it counts and take good care of it: clothes, furniture, appliances. Not the latest model. Just good quality that will last longer. Same goes for cars.
23. Keep a constant weight – you won’t need to buy new clothes. I often joked that Oprah would not have had such major weight losses and gains had she been too poor to buy a new wardrobe.
24. Keep your car as long as possible (from someone here who kept one for 15 years) – for that, make sure to do regular maintenance
25. Don’t buy a car. This is the biggest way you could be saving money. A lot of money – like $5,000 – $8,000 a year
26. Live below your means. Even after savings, spend a little less than what is possible. Give yourself a “buffer financial zone” for the unexpected
27. Use a car sharing service, like Vrtucar, Lyft or Zipcar and others
28. Do your grocery shopping once or twice a month only. The less you set foot in a store, the less money you will spend. You know every time you go to the store for milk and come out with $20. worth of something else
29. Review your financial plan once every six months. Are you on track for how you want your life to be 10, 20, 30 years from now? The same way you weigh yourself to keep your healthy weight, you need to this with your finances to avoid being thrown in the ditch.
30. Take care of your health. Being sick, paying for medication, needing care is awfully expensive
31. Don’t smoke, drink sparingly. Those two habits can keep you poor and make you very unhealthy, even kill you
32. Eat healthy. This goes to keeping you healthy now and in the future. Being healthy will also make you more productive at work and avoid too many sick days and trips to the doctor
33. Of course pay your credit card every month before it’s due. If you find you are struggling to do so, put yourself on the envelope system. Cash in each and when there’s no money left, you stop spending
34. Use your competitiveness to your advantage. Instead of trying to out-spend your friends, try to out-save them or out-save what you did last month. Make it a game to spend less and save more: think cable, cell phone, gym membership, magazines, latte, lunch out. Have a saving money challenge with yourself.
35. Move to a smaller place if you don’t need the space you have. Smaller means less money spent on utilities and maintenance. Housing is the most expensive of all – if you can save on how much your living quarters cost you, you will come ahead of the financial game.
I hope you found this post helpful about how you can be saving money to reach your financial goals. Please let me know which steps you will take. Please share this article with your network and on social media to help me reach more people. Thank you.