Do you know where your money goes every month? When you retire, you’ll need to figure out how much money is coming in the door, which is often pretty simple. The hard part is figuring out where your money goes every month, yet it’s essential to do that before you transition into retirement, so you’re not blindsided by too little coming in and too much going out.

This week’s episodes have been building - I started by talking about why it’s so important to budget and track your spending before retirement, then I talked about how to find out what you’re likely to spend in retirement.

I’ll spend the rest of the week talking about how to find a budget system that works for you and the quick and easy way to get started with a budget that’s designed for those of you who hate budgets.

But before I do that, today, I want to talk about spending habits. When you start tracking your spending you’ll likely have a few surprises. Maybe you discover that you spend more on your dog than your mortgage every month. Believe it or not, I’ve seen that. Maybe if you’re like me, you think you don’t spend much on eating out until you realize that your Egg McMuffin breakfast habit is getting out of control.

If you have a shortfall in your budget where you will have more money going out in retirement than coming in, you probably don’t have to start eating rice and beans every night, and sell your car for a 1994 Toyota Camry. But you will want to pay attention to those 1 or 2 areas of spending that seem a bit high, and experiment with how you can cut back in those areas.

Again, it’s critical to do this before retirement. It would be a real bummer to discover this after you retire, and feel like you have to pinch pennies all the time, so find a way to cut back now if you have a shortfall in your income vs. spending.

Here are a few ideas to get you thinking that have worked for me:

1. With personal care - are you willing to DIY your own nails, or use (gasp!) haircolor in a box? Or dare I say, even easier and cheaper would be to let those wisdom hairs grow in. That’s code for gray hair. So ask yourself, “what am I paying for right now, that I’d be willing to stop paying for altogether or switch to DIY?
2. This one I call the cart trick. It works really well for online shopping. If you are buying something online, go ahead and put it in your cart and leave it there for a week. If you forget about it, then you didn’t need it or want it that much anyway. If you come back to it a week later and you still want it as much as you did before and you’ve been obsessing about it all week, then go ahead and make the purchase. Keeping something in your cart for a week before you pull the trigger, will help reduce your spending and curb your impulse spending.
3. If you’re someone who likes games and challenges, try a “No spend week”. Make sure you have toilet paper and groceries before you start the week, and then buy nothing all week. No eating out, no coffee, nothing. Don’t open your wallet...at all! This helps to condition you not to NEED to buy things. Also, pay attention to how it makes you feel. It always helps me realize that I’m just as happy and satisfied when I’m not buying stuff, and that stuff doesn’t bring happiness.

Everyone is different, so find something that works for you.

That’s it for today. Thanks for listening!

My name is Ashley Micciche and this is the One Minute Retirement Tip.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance, wealth management, fee only financial advisor, financial planner, budgeting, budgeting tips, budget, retirement budget, budgeting app, how to track spending