Retirement Savings Secrets Revealed
The title of this article says it all and is really the bottom line you need to strive for. Your goal is to find any unnecessary spending and cut back. We all have daily expenses that can be trimmed and added to our retirement savings which should be one of our top priorities.
One of the reasons that the “B” word or budget is so terrifying is that it’s associated with sacrifice. This simply isn’t true…a budget is, and should be, a matter of choice.
Two primary choices to begin with – do you want to live it up today and not care about tomorrow? Or do you want to exercise good judgment and cut back a little today so that you will have a more comfortable retirement? I’d like to have both, but I’m not aware of any wealthy relatives that would sponsor me.
This is why we should overcome our fears and create a workable personal spending plan now. Many individuals create a budget that simply isn’t realistic, and after a short period of time, they abandon it.
[bctt tweet=”Create a realistic budget to get out of debt before you retire.” username=”HBSMoneyTips”]
Instead of calling it a budget, substitute “personal spending plan”. The idea is to see just where all of your money is going, and this is the first very important step we all need to take.
It’s also helpful if we set and prioritize our financial goals. Just as important is to set a timeline for completing these goals. This could lead us to make different decisions on how we spend money, and perhaps we won’t have to do very much trimming.
Getting your spending plan developed isn’t about sacrifice. It means that you need to be aware that you’re spending money on items that aren’t important and you need to make a decision to shift that amount towards retirement savings.
Here are a few good tips to help you get started:
- “Just the facts Ma’am” as Joe Friday would say. This first step is to gather everything together…your income; all bills; how much you owe; amounts spent for groceries and other similar costs; eating out; entertainment, etc.. Get your credit card bills & look on there for other spending. Don’t hold back, get it all.
- Next, identify and set your financial goals – immediate, short term, and long range. This will take a little time to do, so continue to write them down as you brainstorm. Be very sure that you have investing for retirement savings as one of your major goals and stick with it.
- After goals are identified and all income and expenses are determined, see where you stand. Don’t be alarmed if you see that all income is spent, plus a little more…most individuals are in that boat.
- Now you must consider your choices and you only have two. You either need to earn more or spend less, it’s that simple. Fixed expenses such as rent, utilities, etc. are set, so now you need to look at the discretionary items.
- Don’t make the mistake of placing retirement savings in a discretionary category. After you’re retired and look back at this personal spending plan, you’ll be thankful you didn’t.
- Always remember, this personal spending plan isn’t cut in stone. You need to review it periodically and make changes where necessary. If you manage to cut out unnecessary spending and have a surplus, it’s okay to reward yourself once in a while with a treat, just don’t overdo it.
There are a number of budgeting software programs available that can be of tremendous help. One of them that I reviewed and recommend is “You Need A Budget”. Besides excellent software, they also offer free classes to help you get the most out of the program.
It was written by a CPA who knows and understands budgeting. I’m not an affiliate, nor do I receive any type of remuneration from them, so this is an honest recommendation. I also purchased the software at the regular sales price, no discount or other freebies.
When you first begin to set up your budget, I mean personal spending plan, it may appear to be a bit daunting. However, keep at it, change it when necessary. If your employer has any pre-tax retirement plans, do your best to max those out.
I’ve seen too many individuals of retirement age that simply can’t afford to retire, and must continue to work if they are able to. Don’t count on Social Security as well, not with those buffoons in Congress looking for ways to pay for their perks by cutting our benefits.
Make sure that your personal spending plan provides an adequate retirement savings contribution. This may very well be all that you can count on.
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