Get on top of your spending habits now for stress free years ahead.
In 2015, a Life+ Money Survey found that a worrying 19.8 % of Americans felt that their biggest financial fear was being too poor to retire. This leads to approximately every 2 in 5 Americans mainly worrying about sticking to a budget or saving for retirement. For retirees worried about outliving their savings, downsizing their spending habits can mean the difference between success and failure. Some plan to downsize their homes while others simplify their lives in other ways.
To reduce your monthly expenses, first have a look at all your monthly outgoings and whether they are necessary. For help in managing your spending habits as you contemplate retirement, a good starting point is making a plan. Decide what ideal of retirement you have in mind, then take steps towards this. Here are some common areas where overspending can occur.
Growing in popularity is the option of downsizing. While you may be able to afford it, a larger home means you should expect household costs such as utilities to go up. Older homeowners, once their children are independent, no longer need a large family home. Considering a smaller home or a less expensive neighborhood can reduce living costs when retired.
Interest from accrued debt can be costing you more than you think. Using savings from cutting back to eliminate your credit card or mortgage earlier, leaves you with more income in your retirement. Another option is refinancing your mortgage or student loans at a lower interest rate. With debts taken care of, you may be able to retire earlier and on much less. Downsizing lends its use here as well; with the added benefit of shifting to a simpler life, downsizing can mean more income going towards paying off your debts.
Downsizing is not the only way to cut costs and the capital recovered from your home will be able to fully fund your retirement. While a social life is fun and convenient, the cost that comes with eating out regularly can be a significant portion of your income. In a research done by Hloom, almost 70% of Americans agreed they waste money on eating out. We all love a good restaurant quality meal but the cost of this for an American household can easily reach $3,000 a year. Eliminating or cutting down on the frequency will still make a difference in your income.
Restaurants can charge up to 300% markup on meals. Taking advantage of senior specials or cooking at home can cost you less than half your restaurant bill and with the variety of recipes online, making a restaurant quality meal is simple.
Another area money can be saved is entertainment. As with eating out, hobbies do not need to be expensive. Older folk also tend to spend more on entertainment as they look to activities to occupy their free time. Cancelling unused memberships and cable bills can save you up to $1,400 annually. With the abundance of nature parks and free activities in communities every weekend, there are many low-cost options and your retirement fund will thank you.
Our tendency to impulse buy influences our choices in the stores and hence, the monthly spend. By the end of the month, there is usually a good portion of groceries unused. Buying exact quantities needed and shopping with a meal plan list is hugely helpful in removing this waste of money. Distinguishing wants from needs helps you downsize your spending habits as you prepare for retirement.
These days stores all carry own name brands. The difference? The price. When shopping in store, it is worth taking a few seconds to read the labels. Using available shopping tools such as comparison sites can also be used to your advantage. It can be tempting to shop all in one place but by shopping around for bargains, you will be looking at a reduced food bill.
Whether it is saving for your retirement or a specific future event, there are many ways to cut back on your spending habits. Taking a closer look at our daily habits may just well show us that what we deem as necessities may just be luxuries.
Bio: Sally Phillips is a professional freelance writer with many years experience across many different areas. She made the move to freelancing from a stressful corporate job and loves the work-life balance it offers her. When not at work, Sally enjoys reading, hiking, spending time with her family and travelling as much as possible.
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