For some people, the thought of saving for retirement elicits a knee-jerk response: But I’m so swamped with bills and living expenses, I don’t have anything extra to save! This really might be true for some people, but for most people it is possible to save for retirement, even if you have to start out slowly.
It’s rare to find anyone who doesn’t have some sort of habit or indulgence, and most of us occasionally (or even often) lose track of how much money we spend on frivolous purchases. For example, there’s always that guy at work who stops by the gourmet coffee cart every morning and afternoon – or maybe that guy is even you! The purchases seem small at the time, but those twice-daily lattes and espressos may total around seven dollars per day or more. If you do the math, that comes to around 152 dollars per month.
This small daily expenditure might even seem invisible until this person goes on a health kick and gives up caffeine, replacing it with water. Suddenly there’s an extra 152 dollars per month in their monthly budget, an amount that they once thought could never be set aside for retirement. If that amount is placed in a retirement account, earning an average interest rate of 7 percent, it could amount to about 120,000 dollars after 25 years of saving*. That’s quite a chunk of change that many people falsely believe they could never accumulate!
No one will ever convince you that you should give up all of your small indulgences and live life as a miser, and you certainly shouldn’t have to. You work hard and deserve to enjoy some of the fruits of your labors now. What the above example serves to illustrate is merely the fact that you most likely do have some disposable income. If you examine your budget and your daily expenditures, you will probably see that this is true.
Realizing you do have some money to save should feel empowering. You can now analyze your goals and decide what really matters to you. If saving for retirement is truly one of your objectives, you can now bump it up a little higher on your list of priorities. Once realizing this fact, many people choose not to deprive themselves of all treats, but to compromise and balance their disposable income between temporary enjoyment and saving for the future. This way you can still enjoy life while thinking about your future.
*This scenario is an illustrative example only, and does not necessarily reflect actual results.