How to save without feeling the pinch.
Planning for retirement is easy. Saving for retirement… well, that’s something else. There are, after all, 101 reasons not to save for retirement. Many obstacles to saving are very real and valid. But the fact of the matter is, if you’re going to reach your retirement dream, you need to save… and the sooner you start, the better.
Here are six steps to help you salt away retirement savings, without the pain of penny pinching. After all, you still have to enjoy life.
Step 1: Budget, if you can – How do you “find” money to save? One of the best ways is to analyze where you spend and then figure out where you can cut back. Maybe eat out less. Vacation at home every so often. After figuring out what you can do without, you can set up a simple budget to help you live within your means and save for retirement. It sounds good, in theory. But the truth is, most of us don’t have the discipline to stick to a budget. That’s where steps two through six come in. Remember, unless you actually contribute this “found money” to your plan, it can’t grow into savings.
Step 2: Pay yourself first – It’s human nature. Once we get hold of money, it’s pretty hard not to spend it. So, one way to save money — a very effective way — is to pay yourself first. In other words, divert the money to your savings plan before you have a chance to spend it. For plan contributions, you can have the money deducted directly from your pay. The money is tucked away before you can spend it. Out of sight, out of mind.
Step 3: Save regularly – You may find it less painful to save a bit each month rather than try to scrape it together all at once. Simply put, you’re less likely to miss $100 a month than a one-time, annual hit of $1,200. Besides being less painful, there are other reasons to save regularly.
- It’s a good habit to get into. You’ll establish a “savings pattern” that will dramatically increase your odds of achieving your retirement goals.
- It can be automatic. You can arrange for automatic deductions from your pay. You don’t have to worry about it — it just happens.