According to the several financial studies, between 40 to 60 percent of Americans live paycheck to paycheck, meaning that they earn just enough to get by. For many, the thought of an early retirement—or any retirement—is not a current achievable goal because there are no funds left over each week to put into retirement savings.
Financial advisors have discovered ways that can free debt committed paycheck funds and can therefore be redirected into a retirement savings nest egg. For example, only one in three households in this country prepare and follow a monthly budget as a way to track their spending. This can lead to a lot of wasteful spending. By following the trail of where those paycheck funds go, you may be surprised at how much is actually coming in and going out.
Families can also take a look at eliminating expenses that may be unnecessary and divert those funds into savings. Some of the biggest potential expenses include cable and satellite television packages. How many of those 450 channels does your family actually watch? If your family is also big take-out consumers, consider cooking more meals at home. There is often a large price difference in the per plate cost for a meal you prepare compared to the per plate cost of that meal from a restaurant. Magazine subscriptions and gym memberships are also areas that may be able to be cut or downsized.
Although several purchased items are necessary—such as groceries—there are ways to cut down how much you are spending each month. Check grocery store sale flyers and stock up on the items you frequently use. Compare buying items in bulk as opposed to single packages. Make a list before you go shopping and stick to it, resisting those impulse buys.
When it comes to the vehicle you drive, eliminating a car payment can free up on the average $450 per month. Once your vehicle is paid off, resist the urge to go out and buy a new and “better” model. Take the amount you would have spent on a new vehicle payment and instead deposit it in a retirement account. Also, shop around for the best prices on car insurance each year.
If you receive a pay raise, instead of incorporating those funds into your household budget, put them into your retirement account instead. Do the same for any unexpected funds, such as a tax refund or job bonus.
Following these tips can begin the process of retirement planning. Additionally, make plans to contact an experienced DuPage County estate planning attorney to discuss other areas that you should address, such as wills, guardians or trusts. Call Stock, Carlson, Oldfield & McGrath LLC at 630-665-2500 to schedule your consultation today.