Get your retirement back on track.
Here are nine ways to trim your expenses now so you can reap the rewards later.
Most people will fail to retire with financial security. Harsh reality, but true.
Will you be one of the few to reach the goal?
Ask yourself this: If I keep doing what I’m doing now, will I be able to retire with financial security?
Unless you answered with an enthusiastic “Yes,” then you need to step up your savings game with additional expense trimming strategies. The extra savings will go toward your retirement and allow you to actually live the life you imagine.
Here’s how it works. Most successful retirements are built brick by brick over many years. Large nest eggs are the result of thousands of small, daily actions done right. In short, all the savings and frugality tips you’ve learned here can make a huge financial difference for your family. The compound effect of small savings is dramatic.
Unfortunately, too many people don’t pay attention to these details and miss how the small financial decisions affect the big picture. Below are 4 essential calculator tools and 9 savings strategies to help you connect these small details into a cohesive financial strategy that can result in a secure retirement for you and your family:
1. Estimate your retirement income
Your starting point is to use a retirement calculator to figure out how much money you need to retire. After all, you can’t attain a goal unless you first define what it is. The difference between your retirement savings goal and your current savings determines the gap or shortfall you must overcome through savings. Research shows that simply defining this gap results in taking constructive action to close the gap. Below are some ideas to consider for those constructive actions…
2. Skip the Latte Line
The next step is to pay attention to all the small spending you do regularly because it really adds up. David Bach popularized this principle as The Latte Factor to show how a daily fancy coffee can literally result in millions of dollars in lost savings. Eliminating small, periodic spending is the absolute easiest way to save for retirement. Use this calculator to discover how much money you are wasting on magazine subscriptions, fancy coffee, bottled water, cable bills, and other spending that you barely notice or pay attention to. The lesson you will discover is the true cost of spending is the compounded interest you lose over many years, and not the actual money you spent. Surprising, but true.
3. Eat In
Likewise, eating out really eats into your retirement savings. Save on food expenses by shopping the specials at local markets. Use club cards and coupons to save even more. Many stores offer double coupons and cash-back rewards for loyal customers.
4. Indulge in Occasional Treats
Avoid depriving yourself by savoring a treat every now and then. An occasional Starbucks or restaurant experience is acceptable when it is not a habit, but a special treat instead. It allows you to spend time with loved ones or friends thus providing necessary stress relief and camaraderie. Just be smart about it by using discount websites like Groupon, Living Social and Restaurant.com to scout out great deals and undiscovered hideaways. Most restaurants serve enough food for leftovers, which you can eat the next day thus stretching that dollar even further.
5. Exercise on a Budget
If you’re not getting your money’s worth out of your gym membership, cancel it. Take advantage of free outdoor activities such as hiking, running, walking and cycling. In the event of inclement weather or child-care issues, try some inexpensive home fitness DVDs such as Insanity, P90X and Jillian Michaels.
6. Entertain at Home
Any night can be movie night when you rent a DVD. Save even more by using free and low-cost streaming movie rental sites such as Amazon (you’ll need Amazon Prime service), Hulu and Netflix. Many savvy consumers are forgoing the monthly expense of cable and satellite TV and replacing it with more affordable online movie and TV-show alternatives.
7. Consolidate Debt
You might be astonished at how much your debt is eating into your ability to save for retirement. Consider implementing a debt consolidation strategy to reduce your interest costs or try the well-proven debt snowball to get out of debt the fastest way possible. Both of these calculators will make the number crunching easy so you can know how much money is currently wasted on debt service that could be dedicated toward your savings goals.
8. Travel Smart
Book airline tickets three months in advance to get the lowest prices and best seat choices. When you pack, use a carry-on bag, and you’ll eliminate checked-baggage fees imposed by airlines. Check with your airlines before your flight on luggage size and weight restrictions to avoid last-minute surprises at the airport. When you arrive at your destination, take advantage of free hotel shuttle service if possible thus eliminating car rental charges and parking fees.
9. Be a Bargain Shopper
You rarely need to purchase items at full price anymore, given the economic downturn. Most retailers offer regular sales, discounts, coupons and other promotional offers to valued customers. Sign up for their emails to receive advance notice of sales. Just don’t overspend: Use the shopping opportunities when you really need them, such as for gift buying or essential wardrobe updates. Lastly, comparison-shop with sites like PriceGrabber.com to locate the best deals.
The key takeaway is a few dollars here and there add up to tremendous savings over time that you can apply directly to your retirement. When you make savings a habit then the growth of your regular retirement contributions will make the daily practice fun instead of a sacrifice.
You will feel empowered by getting back on track toward your long-term retirement goals instead of frustrated by wasting these valuable resources on needless or wasteful consumption. Trim your expenses now so you can reap the rewards later.
About the Author
Todd R. Tresidder is a money coach at FinancialMentor.com and author of 5 popular financial books including the retirement planning best seller How Much Money Should I Save For Retirement. His writing has been featured in the Wall Street Journal, Investor’s Business Daily, Smart Money magazine, Bankrate.com, Yahoo Finance, MSN Money, and more. He lives in Reno, Nevada with his wife and two children.