Don’t Let Your Retirement Go Down in Flames

MONEY TALKS – When talking to clients about their spending habits, an old adage that financial planners like to use is “earn more than you burn”. The concept of making more money than you spend is not revolutionary, complex, or new; yet many Americans struggle to save for retirement because they overspend. More often than not, it’s the carefree daily or weekly spending habits that lead to excess consumption which ultimately results in a reduced savings rate. Here are a few easy tips to get you back on track for an early retirement.

Make Your Own Coffee – Every morning when I drive by Dunkin Donuts, there is a line of about ten cars in the drive-thru lane. While a $4 coffee doesn’t seem like much, when you do the math it adds up to $28 per week. Purchasing coffee beans at the grocery store (or Amazon) and making it at home costs less than $2 per week. For those who struggle to get out of the door in the morning, most coffee machines have a programmable timer that lets you predetermine when coffee will begin percolating. 

Drink Water – There are numerous health reasons why you should choose to drink water over juice, soda, or other mass-produced beverages. However, one that may not be top of mind is your financial health. Buying a Diet Coke or Gatorade at the sandwich shop or convenience store usually cost around $2. If you purchase a beverage with lunch every weekday and grab the occasional weekend refreshment you could easily spend $12 per week. On the other hand, drinking fountain water costs absolutely nothing.  

Pack a Lunch – Bringing your lunch with you to work has several advantages; you can pack exactly what you want, eat whenever you please, and save time by avoiding travel or food lines. Furthermore, nowadays it’s difficult to purchase lunch for under $12 per day. Conversely, planning your meals ahead of time by purchasing ingredients at the grocery store should only cost you about $15 per week. If saving $45 per week is not enough motivation, try impressing your friends and coworkers by packing your lunch in a vintage lunch box. 

Dine In – After a long work week it easy to understand why you may want to let someone else do the cooking. Unfortunately, even if you go to your local kid friendly 99 Restaurant on a Friday night, a family of four would be hard pressed to spend much under $100. Thankfully, there are other options besides cooking yourself or going out to eat. Many grocery stores now have expansive take-out sections and there are quite a few online delivery services such as Home Chef that offer oven-ready-meals. And if all else fails, there is always the tried-and-true delivery from your local pizza shop. Obviously the number of people and specific food selection will greatly impact the price, but staying home just once could easily save $70 per week.

Don’t Pay at the Pump – There are several different ways to save money at the gas station. Not surprisingly, avoiding the pump entirely by driving less is the most cost effective method. Consider reducing your commuting mileage by asking your employer if you can work from home 1x or 2x per week. Using online subscriptions services to get your groceries, fill your pantry, and stock up on household goods can save you a trip to the store. If you must fill up, consider using an app such as GasBuddy to find the lowest price gas in your area. Lastly, consider paying cash at the pump as many gas stations offer a cash discount to save on credit card fees. Driving 80 miles less per week and saving 35 cents/gallon at a cheaper gas station could save a total of $15 per week. 

While savings $4 on a cup of coffee may not seem like much, changing daily habits can have a huge impact over time. Making all of the aforementioned changes would save an estimated $168 per week or $8,736 per year. If you saved nothing else but the $8,736 in annual savings and put it towards retirement, your nest egg could be over $2 million after 40 years. On the other hand, if you were already savings towards retirement, adding another $8,736 per year to your existing savings may allow you to retire up to 7 years earlier! Being more self-aware of your spending habits and the long-term financial consequences they have, may help to motivate positive change and help you to avoid putting gas on the fire.