Keeping up with the Joneses, or the Smiths for that matter can wreak havoc on your long-term financial goals. When you fail to make and reach financial goals you may find retirement upon you with few options for meeting your obligations. Don’t let that happen. You can retire comfortably just by living below you means. Adopt one or more of the following strategies that can help you build your savings and retire comfortably.
Make a commitment to live on cash
If you do not have the cash on hand to make the purchase you are considering, you should probably forgo it. When you pay for goods and services with credit, you pay significantly more for the item (because of accrued interest on outstanding balances) than you would have paid in cash. Also, most consumers spend significantly more when they pull out the plastic than they do when they have to count out their cash.
Spend smart by researching purchases
Log onto the Internet to learn about the best deals on purchases you are considering as well as best times to buy. Don’t be afraid to clip coupons, take advantage of discounts or buy at outlets to save on the things you buy.
Sock away any windfalls
So often when we get extra money our first inclination is to take on extra financial obligations. The next time you get a raise why not put all or some of the pay difference in an interest bearing savings account. When you pay off your car or another loan reallocate that amount for your savings or retirement account. The same is true of other windfalls, such as income tax returns; don’t spend them – save them.
Enjoy what you have longer
We often set our sites on a new car or larger house even though what we have is just fine. A well maintained car can bring you ten years or more of dependable transportation. You can save the money you might have spent on a new car payment in your retirement account. You can also resolve to enjoy your home, clothing and other personal items longer, which will save thousands of dollars over the years that could be accruing interest in a savings account.
Plan a budget that allows you to save 30% of your monthly income
If thirty percent seems to steep a savings start make 5% or 10% your goal for the first few months and then work your way up. Review your budget monthly for ways that you can cut back your spending and build up your savings. Each time you get the minimum amount required for a high yield savings vehicle (for CD’s that amount if $500 – $1,000) invest the money in the account of your choice and leave it there.
It isn’t always how much you have that influences your quality of life but how you manage what you have. Even if you aren’t a millionaire you can plan for financially sound retirement years by living below your means while you still have a steady income.