Frugal retirement is something many people are faced with; however, not all individuals are aware of exactly how this can be accomplished.
Being frugal essentially means living on a strict budget and carefully watching all one’s expenses in order to ensure that money is not being spent frivolously, as this can potentially lead to financial hardship.
Learning appropriate money management while a person has a disposable income available is one of the wisest things he or she can do in order to make things less stressful when it comes time to retire.
Getting Organized
One of the smartest ways to prepare oneself for “fixed income” living is to create a budget that involves a specific monthly spending amount and commit to staying within the guidelines established by this budget. An ideal method for establishing a budget is to generate a list of all monthly expenses including miscellaneous spending and small expenses and purchases that may not seem relevant.
The totals should then be added up to see where costs can be potentially cut. Keeping a spending “diary” is also an excellent way to determine exactly where too much money is being spent and where one must be more frugal. Of course, wanting to be more frugal in certain areas is not enough; therefore, a realistic plan for doing so must be created. It is for this reason that those who wish to create a frugal retirement plan must avoid certain mistakes.
Common Pitfalls Associated With Frugal Retirement Planning
Adhering to a budget does not have to be difficult if one avoids certain traps. An example of such a pitfall is setting one’s budget too strictly. One should think of this way he or she would think of trying to follow a diet that is too restrictive. What inevitably happens is the diet ends up not being followed at all. The same result can occur when one is designing a frugal retirement plan.
It is essential to set realistic budget goals, and then add a little “fluff,” so that one can avoid feeling as if he or she can never be treated to a tiny indulgence here and there.
Not setting aside a small fund for emergencies and unexpected expenses is also a mistake. Like it or not, such things happen to everyone, and if money must be subtracted from one’s monthly budget for such occurrences, it will be very difficult to get the frugal retirement plan back on track.
Failing to identify budget busters is another common mistake. This means situations and expenses that drain one’s money unnecessarily. For instance, once a couple has retired, it may be wise to trim down to just one car, as neither party will be traveling to work on a daily basis any longer. This means an instant savings of hundreds of dollars a year, which would be spent on insurance and car maintenance to keep a second vehicle on the road. Joining a wholesale food club is also a way in which to cut costs with out depriving oneself of the necessities of life.
Once a person begins to ponder small details such as these, he or she will be surprised at how many ways there are to cut down on expenses. By changing small habits and paying attention to where one’s money is being spent, he or she will find that living a frugal retirement is a realistic goal.
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