Posted in Triplett & Carothers on April 2, 2025
Are you at risk of overspending and jeopardizing your retirement security? Many people ask themselves this question in the early years after leaving the workforce. For some, overspending stems from travel dreams or luxury purchases. Others face unexpected medical bills, a higher cost of living and/or accumulated credit card debt. Any of these factors can deplete savings more quickly than anticipated.
It’s difficult to scale back retirement dreams, but being practical about finances is just as important as ever. Shifting to a fixed income requires a corresponding shift in thinking; you may need to be more mindful of spending than you have been in the past. You do not want to return to work just to make ends meet. You want to feel secure about your finances to reduce the stress that can negatively impact your long-term health.
It’s crucial to develop a clear understanding of your finances and avoid letting enthusiasm drive excessive spending.
Tips to Stay on Track
Identify and address spending habits. Budget-tracking apps can be very helpful in identifying spending habits. These apps can help you address areas that stand out as problematic. For example, you may not realize how much you are spending on meals out, morning coffee or streaming services. Once you have observed your spending, categorize your expenses into essentials, such as food and transportation, and discretionary items, such as dining out and travel. Use this information to build a budget.
Distinguish between wants and needs. Small changes can significantly alter your spending habits. For example, if you brew coffee at home or prepare dinner yourself a few times each week, you could see substantial savings. Similarly, you might consider borrowing movies from the library instead of subscribing to multiple streaming services. Build a budget that allows you to spend within your means while ensuring that you have less money going out each month than coming in.
Practice discipline. A budget is effective only if you stick to it. Review your spending from month to month, and even from the previous year, to identify patterns and trends, prioritize expenses, and pinpoint areas where you might be wasting money. Using a debit card instead of a credit card can help ensure you’re spending only what you can afford.
Seek discounts. Before you shop, check for sales to take advantage of savings. Similarly, store coupons or AARP discounts on products and services may help you reduce the cost of essentials, allowing you to allocate more money to discretionary items.
It is always beneficial to have an open discussion with your spouse, partner or family to create a workable budget together and establish new spending patterns that will help ensure financial stability without compromising your quality of life.
Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.
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