Don't become an old man, filled with regret. |
The Federal Reserve Board recently found that 31%, nearly one third of American adults had no savings or pension to
help them afford retirement. The survey
also found that 19% of adults
between ages 55 and 64 had no savings.
What are these survey respondents going to do about
retirement?
Many said they planned on working full or part-time in their
retirement years. 25% of survey respondents had no idea
how they could afford retirement at all.
If you don’t save for
your future, you will one day reach retirement age with no money. Your excuses won’t matter by then. Do you want to be filled with the regret of not saving more
during your working years?
Have you started saving for your retirement yet? If not, what’s your excuse?
The most popular excuse I’ve heard:
“I can’t afford to save for my future right now, I’m already
struggling to make ends meet.”
My response: this is a cash flow problem.
Cutting your costs matter
If you spend all the money that you make, you will never be able
to stop working. If you cannot
learn to live on less than you earn, you will never be able to reach financial
freedom. Whether help is from the
government, your parents, or your adult children, you will always be dependent
on financial aid.
Cutting back on your spending can be even more important than
earning more money. According to Mr. Money Mustache, frugality
is a muscle that can be strengthened. There are 3 benefits of cutting costs: you save more in the
short term, you need to spend less in the long term, and you become more of a badass.
Give yourself a raise
In my own experience, cutting back on your expenses is like giving
yourself a permanent lifestyle raise.
We’ve easily cut a lot of our expenses in the last 2 years.
We’ve cut our auto insurance rates by $95 per month by switching
our auto insurance to Geico. We’ve
cut
our cell phone bill from $150 a month down to $15. We’ve cut
our satellite television bill from $70 a month to $0. While the average
electricity bill in our area is $150 a month, we’ve cut
our electricity bill down to about $35 a month. While we used to spend $70 a month on dry cleaning, we now
spend $0. While I used to spend
$56 a month getting hair cuts, my
wife cuts my hair for free. While I used to buy lunch at work everyday for
$180 a month, now I mostly bring
lunch to work, bringing that cost down to $40. By renting out 2 of our bedrooms, we’ve saved $1,250 on our
mortgage.
These few cut backs have saved
us $1,931 per month. That’s
like giving ourselves a $23,172 annual
raise. Could you also use a
$23,172 annual raise? These are
just some of the easy things we’ve cut back on.
Making more money is not the only solution
While making more money can certainly make your lifestyle more
comfortable, earning more is not the only answer to your cash flow
problems. I know people who make
over $200K a year who have money problems. Their solution: “I just need to make more money.”
Generally, the longer you work, the more opportunities you have to
advance your career and your salary.
With each salary increase, this is a chance to invest more in your
financial freedom. If you can’t
get a raise at work, you can use your creativity to make money with side
hustles.
The take home message
If you’re
struggling to make ends meet, you have a cash flow problem. You
need to increase your income and decrease your expenses, simple as that. Fixing your cash flow problem is
the start you need to have money available to fund your own financial
freedom. Always watch your
spending levels, or you will end up with financial troubles - no matter what your
income level is.
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