Many people realise that by the time it comes to retirement, they could have saved double the amount of money that they have done. While it seems that retirement is a lifetime away, don’t let it catch up with you before it’s too late.
Brand Development Manager for Sell Pension, Angela Swan, will discuss the importance of saving money before you retire and advise on the easiest ways to turn saving from a struggle into a habit.
Review your spending habits
Before you can begin to put money away, you need to assess how much you can realistically afford to save. While you want to plan for a happy retirement, you still have to live a comfortable life. There is no need for you to detract from your usual lifestyle for the sake of being able to go on an extra holiday during retirement, so be sensible about what you can put away.
It’s difficult to work out what you actually spend your money on without getting down to the nitty gritty and going through all of your finances. While this may seem like an arduous process, looking back through your bank statements and receipts from the last year is the only way you’ll get an accurate picture of where your money really goes.
Humans naturally respond to visual stimuli, so note down the things you spend your money on and create a visual representation using a bar graph or a pie chart. Remember to colour code categories which demonstrate your fixed outgoings and your non-fixed expenditure. Alternatively, there are plenty of apps for your smartphone which can present this information for you.
Create a realistic budget that you’ll stick to
Once you’ve established what you spend your money on, you can develop a monthly budget to stick to. This budget should be inclusive of all of your outgoings, food and a little extra for you to spend.
While it’s important that you are strict with your spending, don’t restrict yourself too much or you’ll end up spending more than you think you are. By factoring in some “unforeseen charges” you will make it easier not to go over budget. If you think you’ll have trouble keeping track of your finances, then budgeting apps could be of great benefit to you.
Retirement is an exciting time, but for some people it can be hard to adjust to. Relocating to a new house and downsizing can make your retirement feel like a fresh start rather than the end of something.
Think about what your priorities will be once you retire. Do you need a house with 4 bedrooms? Would you like to stay in the hustle and bustle of a city? Choosing a smaller house to save some extra money every month, or if you’ve lived in the city to be closer to your job, consider relocating out of town to somewhere more affordable and relaxing.