There are few people who will slip seamlessly from working into retirement with no ill effect on their standard of living. For most of us there is a good chance that when we retire, our income will be reduced by at least 50%.
For this reason, it is a valuable exercise to try to reduce your current expenditure by 50%. That’s a huge reduction, and you probably won’t make it! It is important to consider cutting back now rather than having the shock at retirement.
Budgeting is usually a chore that we avoid. But the time has come to draw up a budget, which will help you spend more carefully and eliminate your debt. Your aim is to SAVE, SAVE, SAVE.
It is important to know where you are going financially. It helps you to keep track of money coming in and money going out.
Once you have drawn up a budget, pay the essentials first. Bond repayments, accounts, loans, school fees, rent, car repayments and food are the essentials. These are often neglected because uncontrolled spending on credit has swallowed up your salary.
If you are spending so much on paying off clothing and appliance accounts that you cannot afford essentials and have to resort to going into debt to buy food, you are in serious trouble. If you do not control this you will sink deeper and deeper into debt each passing month.
Luxuries today are robbing you of your retirement. You need to make sacrifices today for your financial security – saving and sacrifice go hand-in-hand.
Money that you pay in interest on your accounts is money you could be using to save for your retirement.
If you seriously make the effort to clear all debt by the time you retire, start reducing monthly expenditure a little each month and draw up a monthly budget (and stick to it), you will have made huge strides in securing your comfort and financial well-being in retirement.