As I wrote last month, if your savings can not cover the difference between your retirement expenses and your retirement income, you need to cut your living expenses and aggressively save. First, make sure you have prepared a monthly budget:
BANKING & SAVING
•Stop paying bank fees by maintaining minimum balances and eliminating overdrafts. •Unless you pay off the balance each month, stop using credit cards. •Automate your savings. Make savings a line-item in your budget. •Save unexpected windfalls like bonuses and tax refunds. •If you get paid bi-weekly, you will receive 26 paychecks per year. Live on 24 paychecks per year (two per month) and save the two extra paychecks. SHOPPING & GROCERIES •Before buying anything, ask yourself, “Is this a need or a want?” •Spend only cash. Leave debit and credit cards at home. •Wait 24 hours prior to buying something that costs more than a certain amount to curb impulse purchases. •Use coupons. Buy things on sale and at discount outlets. Research for the lowest price. •Buy used items. Shop at consignment stores. •Stop costly habits. Make coffee at home. Bring your lunch to work. •Cut back eating out at restaurants. •Plan your meals for the week and then make your grocery shopping list. Buy only the items on the list. •Buy lower-cost store-brands at the supermarket. •Buy produce when it’s in season. Buy clothing and merchandise out of season. HOME & UTILITIES •Sell items that you no longer need by having a garage sale or sell online on Craigslist or eBay. •Think before you replace something. Can you fix it, borrow it, or do without? •Contact your utility company for an energy audit. •Lower your thermostat by 1 degree and save 1-2% on your heating bill. •Disconnect your cable. Sign up for streaming services like Netflix or Amazon Prime to watch your favorite shows. •If you aren’t able to cut out cable completely, contact your cable company regarding special bundles or rates for long-time customers. •Knowing your data and text usage, contact your cell phone provider to determine the best cell phone plan for your needs. AUTOMOBILE & INSURANCE •Buy a used car. •Once you buy the car, start saving for your next car. Avoid car loans if possible. •If you drive an older car and you have an emergency fund, drop your collision coverage. •Avoid needless expenses on your car by performing regular maintenance. •Don’t get rental car insurance. If you have full insurance coverage on your own car, your coverage extends to the rental car. •Consider alternatives to car ownership such as using public transportation and ride-sharing services like Uber. •Bundle home and automobile insurance to receive a discount. •Do not sign up for extended warranties. ENTERTAINMENT •Search for free or low-cost entertainment in your community. If you love the theater, volunteer to be an usher. Explore inexpensive adult-education courses. •Instead of purchasing, borrow books and magazines from your local public library. •Cancel memberships and subscriptions that you don’t use. •Take advantage of senior discounts. •Join the local senior center, a great place to find companionship, activities, and other resources. •Find less expensive ways to celebrate holidays and birthdays. Writing a note or spending time with loved ones is more thoughtful than an expensive gift. It’s more enjoyable for all…and you’ll save money! Reducing discretionary living expenses is a great start, but one of the biggest living expenses is housing. Look out for next month’s article for housing options and ways to lower your housing expenses. Beth Carroll is a CPA and a Professional Daily Money Manager. Her company, Cornerstone Money Management, LLC, helps seniors in their homes with billpay, financial organization and cash flow management. You may reach her at beth@cornerstonemoneymgmt.com or 401-323-4895.
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Beth Carroll - CPA
Member of: AADMM AICPA, RISCPA Archives
December 2019
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