7 Frugal Habits That Will Pay Off Big Time for Boomers in Retirement
Ready to start planning for the retirement you really deserve? In that case, you’ve got to start right now, because time is money when it comes to saving and investing for big goals.
Check Out: 6 Ways To Lower Expenses in Retirement While Still Living a Luxury Lifestyle
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Even if you’re just a few years away from retirement, you can still make small changes that could yield big results. Here are some frugal habits that can help (and which also apply to those already retired).
1. Ignoring FOMO
The fear of missing out, or FOMO, can lead to overspending. When you see your neighbor’s new car, your friend’s birthday bash in Cabo or any number of envy-provoking purchases, you may feel a strong desire to do something similar.
However, being able to resist this temptation can mean the difference between the retirement you desire versus the one you actually saved for. Save money by skipping out on FOMO. Instead, maintain a steady savings rate that could literally pay dividends during your retirement years. Your nest egg will thank you!
Learn More: I Retired Early — Here’s My Monthly Budget
2. Living on Less Than You Make
If you routinely spend all of your income, then you won’t have enough money to invest, save or even pay off debt. In fact, spending less than you make — and saving or investing the difference — is the key to padding your retirement account.
Though it sounds nearly impossible with inflation raging and interest rates remaining quite high, there are certainly ways to earn more money and cut expenses. Having a budget is a great place to start, which we’ll cover below.
3. Creating and Living on a Budget
Budgets get a notoriously bad rap for being restrictive or sucking all the fun out of life. In fact, nothing could be further from the truth!
A budget, also known as a spending plan, provides a strategic system for setting spending priorities based on financial goals. Once your spending plan is in place, you can allocate funds to the categories needed to run your household. The best part is that you can add line items for fun things like vacations, shopping sprees and big-ticket items. You can also add and increase your savings for goals like investing and saving for retirement.
4. Shopping Around for the Best Deal
The simple act of checking for lower prices can save money on common expenses and help you meet other financial goals. You can shop around for everything from clothing to vehicles, and from groceries to professional services.
In that same vein, you can also contact your current service providers (think insurance, cable, telephone, etc.) and ask if you are eligible for discounts or price reductions. You might be surprised to find out that many companies will offer to reduce your bill for being a loyal customer. They may also do so to keep you from canceling your account: Ask to speak to a retention officer or department.
5. Using Debt Sparingly
Debt can be appropriate in some situations, but overusing it can lead to paying massive amounts of interest. Paying interest means you’ll have less money to live on — and even less to put into savings and other income-producing assets, all of which assist you in your retirement years. Minimize the use of debt and pay it off aggressively when possible.
6. Taking Risks
Playing it safe with your money means better protecting yourself from major losses. On the flip side, it also means that you could be shielding yourself from big wins, too.
If you’re a little squeamish about risk, set aside money you can afford to lose and use it accordingly. You never know where that investment in a friend’s start-up or in a new cryptocurrency could end up.
Remember to make bets on yourself, too. Change careers, start that business — the biggest rewards often come to those who take the greatest risks!
7. Living a Little
It sounds counterintuitive, but taking a break from the rigors of financial discipline can be helpful. If all you do is cut expenses, eat rice and beans and put all your disposable income into savings, you could experience “frugal fatigue.”
With frugal fatigue, the danger is becoming worn out from all the sacrifices you make now for a distant future. In this phase, discouragement can set in, putting you at risk of throwing caution to the wind. From here, it’s easy to overspend far beyond your intentions. It’s kind of like going on an extreme diet and then binge eating once you get way too hungry! Don’t put your progress at stake. Relax!
To avoid frugal fatigue, budget your time and money to include the fun stuff. When you reach certain milestones, like paying off a big debt, take time to celebrate and treat yourself as needed.
Final Thoughts
Preparing for retirement is important, but remember there are many paths to one destination. That’s why “flexible frugality” is important — so you can make it to your golden years happy, fulfilled and without regrets.
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This article originally appeared on GOBankingRates.com: 7 Frugal Habits That Will Pay Off Big Time for Boomers in Retirement
