Smart Ways to Live Rich Today While Saving for Retirement
The following is adapted from Ultimate Vacation by Randy Carver.
If you’re fifty-eight, want to retire at sixty-four, and have some financial ground to make up, the future is in your grasp, but you may have to work a little harder for it.
That might mean forgoing vacations and restaurant visits, but that doesn’t mean you can’t find a cost-effective way to enjoy yourself.
The truth is that you can make small changes to improve your life today, like cutting some expenses while keeping the indulgences you love, that also help you save for tomorrow.
Here are some helpful tips to consider on your journey to retirement that will keep the present satisfying and the future protected.
Eliminate Unnecessary Spending and Make Small Changes
A common trait among the most successful retirees, and those approaching retirement, is that they don’t buy what they don’t need. They keep their impulse for instant gratification in check.
This isn’t to say that you need to entirely eliminate spending on the things that are important to you or that you enjoy, just that it’s important to take a good look at your budget and see if there are any line items you can eliminate so you can have more for what you love.
For instance, if you consider yourself a foodie and couldn’t imagine a world where you didn’t get to dine out at least three times a week, what other expenses can you cut so that you can enjoy this creature comfort without hurting yourself either in the present or in the future? You can likely find compromises that allow you to enjoy your favorite comforts while still saving for retirement.
Find Low-Cost Alternatives
Find alternative activities that cost nothing or cost less than the options you’ve been using. To use our foodie example again, you might love dining out a few times a week, but perhaps you could cut your outings down by one night and commit to making a nice home-cooked meal instead. Not only could you learn or hone a skill, but you’d likely be saving money in the process.
Alternatively, you could take advantage of different services to enjoy the things you love at a discount. Groupon and other similar sites offer great deals all the time. If you’re more interested in taking a vacation than in where you go, then these services are great for finding a cabin or booking a last-minute cruise at an incredibly marked-down rate.
Create Categories for Spending
Break your budget into categories like large purchases (think vacations or a new television), savings and investments, and current spending needs. This method will help you maximize what you have to put into savings for two reasons:
- It will give you a better idea of what you’re actually spending (which many people don’t know).
- It will help you better track progress toward your spending priorities.
Do this right, and the net benefit to you is more money to spend on what you wish. What’s not to like?
Pay Off Debts
Bad debts, which include credit card debt and debts incurred to purchase depreciable assets, hinder your current lifestyle and the amount you can save for the future. Paying these debts off quickly will allow you to allocate money to current and future expenses.
To be fair, not all bad debt is self-inflicted. If you’re eating out every night when you can’t afford it and running up a $30,000 credit card bill, then that’s self-inflicted debt with no clear benefit. However, if you have a medical emergency and the only way to pay is a credit card, it’s not ideal, but you have to do what you have to do. In either case, your goal afterward is to pay off that debt as quickly as possible.
By paying off your debts, you’ll have less money going toward interest and more toward the present and retirement.
Compromise Without Sacrifice
You want to enjoy yourself in the present, but you also want to experience greater financial freedom in the future. Fortunately, you can do both, and the changes you make today won’t feel like major sacrifices.
Whether you cut unnecessary spending or find cheaper alternatives to the things you love, by applying the tips discussed in this article to reduce expenses and debt, you’ll find the right balance between spending and saving that lets you have a rich present and a comfortable future.
For more advice on retirement planning, you can find Ultimate Vacation on Amazon.
Randy Carver is the president and founder of Carver Financial Services Inc., and also a registered principal with Raymond James Financial Services, Inc. Randy has been in the financial services business for thirty years and Carver Financial Services Inc. is one of the largest independent financial services offices in the country, managing $1.5 billion in assets for clients globally as of July 2019.
