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When retirement is decades away — or even just a few years out — it can feel hard to save, especially when taking into consideration all of the short-term goals or desires there are in life.
Retirement Tip of the Week: Put your retirement goals and needs into perspective by looking at your cash flow diligently, and making adjustments to your spending. Don’t forget the little (and big) splurges you want to spend on, just plan accordingly for all of it.
The first step is to see what money is coming in and going out.
“Look at your cash flow. If you don’t want to say the b word, budget, say cash flow,” Marguerita Cheng, a certified financial planner and chief executive officer of Blue Ocean Wealth Management, said during a MarketWatch virtual event called “Mastering Your Money.”
This can be done by reviewing bank and credit card statements, and knowing exactly what income you have and what debts you need to pay. Then see what money, if any, you have left over to spend.
At its core, this exercise comes down to essential expenses, which may not be a fixed amount of money every month. For example, electric and water bills are core expenses, but they vary month-to-month based on usage.
Cheng and George Hobica, founder of Airfarewatchdog.com, spoke with MarketWatch during a session on Spending and Splurging, and discussed how to balance the luxury expenses with the necessities. What may be discretionary spending for some people, like to-go coffee or taxi rides, might seem like a necessity to others, so it comes down to what you value, Cheng said. But think also about what your goals actually are – if your money isn’t going toward what you value, which you’ll see after poring over your credit card statements from the last few months, you can make adjustments.
“This is where you’re empowered to make those adjustments you can,” Cheng said. “Say, you know what, I really value my streaming service but I don’t find value in X so much anymore. It is in the context of your current situation as well as what you want to do in the future.”
There are also plenty of ways to pursue your goals and save a few dollars. For people who want to save for retirement but also travel, try talking directly to hotels and airlines, which may add extra perks to entice you to stay with them, Hobica suggested. Cable and cell service providers will also work with customers to find the right-priced packages or offer discounts where applicable.
Part of the process is also keeping your goals in sight. Retirement might seem like a long way away — which is what keeps some Americans from saving for it — but if you keep it front of mind (as much as possible), it’ll remain a priority.
You can watch the full session with Cheng and Hobica here.
