3 Easy Steps To Saving An Additional $20K In Less Than 10 Years
Are you closing in on retirement and your nest egg could use a little boost? Mine too, so I came up with a plan to increase my savings by just making a couple of small changes in my life.
Step 1. Take an honest look at your spending habits.
Most everyone I have talked with has lost a considerable about of their retirement nest egg over the past decade, or two, due to economic shifts. I know that I am right there with a lot of other hard working and hard saving people who got caught in the crossfire. The challenge for me was that without a huge increase in salary, or moving into a hut in the woods until I retire to cut down on housing expenses, I wasn’t sure how in the world I was going to increase my retirement savings. What a dilemma, it seemed. That’s where I took control of my future, taking an honest and detailed look at my spending habits. What an eye opening exercise that was! Yikes. My money was slipping away like water through a sieve. The next logical question was, what can I do about it?
So, this is what I did and it is going to result in a pretty nice payoff.
Step 2. Replace unnecessary spending with less expensive options.
When looking at your monthly expenditures, find a daily expenditure of about $5, one that can be eliminated or decreased substantially. I decided to say good-bye to coffee shop coffee and hello to coffee at home.
I started by cutting out the $5 cup of coffee, one day a week to start. Overtime, I eliminated the number of trips I made to the local coffee shop during the week, and made my daily order of a grande, soy, extra hot, no whip mocha a special treat on the weekend. Goodbye baristas! Hello retirement savings! I decided to replace those $5 daily trips to the coffee shop with a more cost effective morning coffee tradition. Now, I make a nice cup of coffee in the morning at home. It took me a while to find the perfect coffee combination that felt just as special as the one that my favorite barista would make for me, but I did! I take my freshly brewed cup of joe, pour it into my favorite feel good ceramic mug, and top it with a splash of delicious hazelnut coconut creamer. I get up just a little bit earlier in the morning, and after preparing my new favorite coffee drink, I settle into my cozy recliner by the front window where I can watch the sky shift color as the day begins. It has become a lovely tradition and I wouldn’t trade it for waiting in line at a noisy coffee shop for anything! At work, I switched to tea, just regular tea. I got used to it. It’s my new “habit.” And, that new habit, plus my new morning coffee tradition, is saving me a lot of money.
Making My Morning Coffee At Home:
Savings per week = $25.
Savings per year = $1300.
Amount saved by the time I retire in 8.2 years? $10,660!!!
Next, find a $10 expense that you have on a daily, or almost daily basis. Maybe it’s buying bottled water and pop during the day and making a run to the vending machine for an afternoon pick-me-up snack. For me, the next savings opportunity was not going out for lunch.
Let’s see what the savings amount to with this change.
I easily fell into the “Where do you want to go for lunch?” mode at work. It is a social time for me, a time when I can sit and enjoy some good conversation and laughs with my co-workers. The restaurants we go to are middle of the road with lunches running somewhere between $8-10. Usually, we go for Thai or Vietnamese, so the food is healthy, and that was part of my justification for eating out. Healthy food! Eating lunch out became a regular pattern for me, as not only was it a time to nourish my body, but also my social soul. As I looked at my bank statement closely, I noticed just how many times I was going out for lunch each month. It hits hard when you see the numbers in print! So, I decided that I would started bringing my lunch, a good healthy, fill-me-up, well balanced lunch and only go out for lunch one day a week.
Making My Own Lunch:
Savings per week = $40.
Savings per year = $2080.
Now, for the grand total, the increase to my nest egg over the next 8.2 years? Are you ready for this?
A whopping $17,056!!!!
Step 3. Redirect that money to an untouchable savings account.
Increased savings, the result of cutting down on coffee and lunches out over the next 8.2 years until my retirement begins, totals $27,716!!! Woah! That’s a nice chunk of change with just a couple of small lifestyle changes!
After identifying what expenses I could reduce or eliminate and putting those changes into action, the critical last step was to put that money away somewhere where I couldn’t easily access it. Under the mattress or in a jar in the kitchen cupboard came to mind, but I knew I wouldn’t be able to keep myself from just “borrowing” a little of it and, well, you know, promising to put it back. I had to chuckle to myself that I had even considered that might be an option!
It seemed to me that the best way to keep my hands off that money was to put it in a place where I couldn’t just open the jar and borrow a little of it. So, I decided to have my payroll deductions adjusted to the amount I was now able to save, as a result of these small changes, and have that amount automatically deposited into my retirement account. I was already spending it, now I am just redirecting it!
The end result of this redirection of funds gives me an increase of over $25,000 dollars in my retirement savings account when I retire. The long term results make me smile, as I sit here in my cozy chair watching the sunrise, with my little dog, Maggie Mae and a delicious cup of coffee.
Redirected to Retirement Savings:
Coffee shop annual savings = $10,660!!!
Eating lunch out annual savings = $17,056!!!!
Money redirected to my retirement account in time for my retirement in 8.2 years = $27,716!!!
Have you taken a close look at how you spend your money? Maybe for you it is dinners out, getting snacks at the movies, daily visits to the vending machine, drinking sodas, bottled water or those expensive energy drinks.
What is your money sieve? With a couple of small changes to your lifestyle, how much more money will you be able to contribute to your retirement savings? Share your ideas and thoughts in the comment section below.
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