As you transition into retirement, advance planning and years of hard work have hopefully provided for a satisfactory lifestyle. But most retirees do find that their retirement budgets are not quite as generous as the incomes they enjoyed during their working years. As you learn to become a bit more frugal, incorporate some of these seven tips into your life. If you begin using them now, before you retire, you might enjoy double effects: You can free up more money to save for retirement, and also ease the transition into your new life.
Pay attention. When you hear “budget tricks” you probably picture money-saving secrets or coupons in the Sunday newspaper. Truly, the best budget trick in the world is to pay attention to how much money you earn and where it goes. The accounting method you choose should feel easy to use and make sense to you. Some people prefer smart phone apps, while others use a computer program, and a few people still use the old pencil-and-paper method. It doesn’t matter how you do it; just choose an accounting method that you will use methodically and faithfully.
Compare wants versus needs. It’s perfectly fine to indulge in a “want” sometimes. But when you stay mindful about the difference between wants and needs, it will be much easier to maintain a realistic budget.
Spend less than you earn. You might often hear the advice to “live within your means”, meaning you don’t spend more than you make. In reality, living below your means is the best idea. You should structure your budget so that you have money left over at the end of each month. Now set aside that extra cash for emergencies.
Balance spending versus investing. When you spend money, you exchange it for something that does not provide long-term benefit. It’s part of life, of course, and no one is saying you should never spend money. Investing, on the other hand, means that you use your money to obtain something that will provide value over time, or even result in an increased cash flow. Understanding this difference will help you put your money to work for your budget, rather than against it.
Consider value versus price. Frugality doesn’t always mean choosing the least expensive item. If you need a new item, compare the long-term value of a more expensive item, with the price of having to replace the cheaper item several times. Often the more expensive, higher quality item is actually the better deal.
Avoid debt. Any time you are tempted to charge a purchase to your credit card, ask if you’re willing to pay more than the price on the tag. If you can’t pay off the purchase during the current billing cycle, you’re paying a higher price for each item that your charge.
Seek expert advice. Planning for the future is an essential part of a sound financial strategy. Schedule an appointment with us to discuss your retirement savings strategy, and we can help you make both long-term and short-term adjustments to benefit your budget.
