Finding Money for your Retirement Savings

Friday Financial Tidbit
Pinnacle Personnel Services  |  Debbie Hatch
How many times have you thought, “I can’t possibly afford to save for retirement”?
It can definitely feel that way and is occasionally true.  Although, even as a single mom of two on a very limited budget, I committed to buying a $50 savings bond each month.  It wasn’t much but it was the best I could do.  It was something.
Times can be tough.  Money can be tight.
I do find that if we look at how we’re spending money, though, most of us can find leaks where it is seeping out.  We may not even be aware of it.  Plugging those holes can make a big difference.
Here are a couple of suggestions for where you might “find” money to put into a retirement savings account.
 
==> Pay attention to your credit card and bank statements. 
 
I always do a quick glance to make sure nothing jumps out at me. Last year several months passed before I had the time (or energy) to do a detailed audit, though. I found a couple of things.
 
(1) I had signed up for a “free” music subscription service. While I had also canceled it within the trial period, the company continued to charge me. Contacting them about that garnered a refund of $191.82.
 
(2) I was a Beachbody coach for a while but had canceled that membership too. The company continued to charge me. Staying on them and finally getting it canceled, resulted in a refund of $164.80.
(3) When I made the time to audit my bank statements, I found they were charging me a $10/month service charge.  I called the bank and was told that while I DID have the minimum balance, I did not have it in every one of my accounts.  I didn’t need separate accounts, merged two, and recouped $120.
==>  Pay attention to where your money is going. 
Sounds simplistic and, in fact, that’s the beauty of it.  We all spend money on things we’re not actually using.  Keep a log for one month.  Write down every dollar you spend as you’re spending it.  Don’t rely on your monthly statements, actually get a small notebook and write it down.  Review your list weekly.
How often are you going out to eat?  Could you cut that back by one third?  By a half?
Are you making impulse purchases?  Can you create a plan for doing something else the next time you feel you need “retail therapy”?
What does your internet, home entertainment and cell phone bill look like?  Have the prices crept up since you signed up on an introductory offer?  Do you need everything you’re paying for?
(4) I found a magazine subscription that I was paying $17 / month for.  Fact is, I had a year’s worth of electronic magazines stuck in a folder on my laptop.  I hadn’t looked at any of them.  I canceled the subscription and saved $204.
(5) Paying for my coffee with cash every day, instead of the mobile app.  How convenient are the apps?  Wow.  Just type in a password or press your thumbprint on the screen and voila, “free” stuff.  It feels like that!  Cutting back to one boutique coffee per day instead of two ($4 / day times 5 days a week times 52 weeks a year) saved $1,040.
 
==>  A couple of things are important here.
 
1. Audit every one of your credit card and bank statements.  Do this every month if you can (I understand we get busy and tired).  
 
2. Be tenacious in following up with companies that continue to charge you, even after they are not supposed to.
3.  Be honest with yourself about where your money is going.
 
THE MOST IMPORTANT PART
Once you find the financial sinkholes and leaks in your budget, and you plug them, it’s very important to adjust the amount you’re putting into your retirement savings account. If you don’t do it right away, that money will just disappear somewhere else.
Federal employees cannot simply deposit money into the Thrift Savings Program.  They can, however, use the money “found” to pay bills/living expenses and adjust contributions to their retirement account by that amount.
Let’s assume I am somewhere in the middle of my career and deposit the $1,720.62 identified above into an investment paying a 5% rate of return.  In 15 years when I retire, I will have an additional $3,577.05 in my account.

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