It’s all well and good to be told to save as much as you can for retirement, but we know there are many demands on your hard-earned dollars. Where exactly are you expected to get the money to put into your retirement plan?


Start with how much you may need. You might be surprised at how little you’ll need or shocked at how much! Either way it’s best to know upfront. Listen to “Determine your retirement paycheck” for some pointers.


Next do a spending plan — notice the b-word wasn’t used? It’s up to you where you want to spend your money. If you want a latte every day, then get it. That Hawaiian vacation, take it. Just make those informed spending choices. Know and decide what you may need to give up to make those things you really want happen.


The point of creating a spending plan is to help you control your money so it doesn’t control you. Look at it as three steps to help achieve financial freedom.

1. List your sources of income.
2. List your expenses.
  • Not just mortgage/rent, utilities, etc., but the “little” expenses too. For a week, write down everything you spend, including vending machine snacks, birthday cards/gifts, movie tickets, etc.
3. Compare the two.


Once you compare what’s coming in with what’s going out, you may find a gap. Now is when this becomes your spending plan. You decide what to keep and what to give up (or do less often). A general rule of thumb is to distinguish wants vs. needs. Usually needs are those things you must have for survival — a place to live, food to eat and clothing to wear. Wants are everything else.


However, one person’s want may be another person’s need and vice versa. Take food. Maybe you can get by on mac and cheese, but someone else must have gourmet meals everyday or life is not worth living. Look for ways to cut out or cut back on the things that aren’t that important to you. Here are some other suggestions:

  • Cut back on lunches out — even brown bagging one day a week may help.
  • Clip coupons.
  • Check out the kids-eat-free nights at local restaurants.
  • Look for free days at museums, zoos and science centers.
  • Take the senior discount if you qualify for it.
  • See if you qualify for the Saver’s Credit.


You may be surprised how the “little” things might add up and potentially become an additional 1% contribution to your retirement plan. It may not sound like much, but it’s a step up from where you were before.

Sources:, National Endowment for Financial Education. “Create a spending plan,” 2010.,“99 great ways to save,” July-August, 2010.

This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.