In practice, planning for retirement sounds great, until reality hits the wallet. Saving money when you’re living paycheck to paycheck or running a small business is no walk in the park. Let’s be honest. You have bills to pay, mouths to feed, perhaps even an extra project to work on. But how, then, can you sock away for retirement without reducing your already slimmed down budget?
As it turns out, it’s fully doable. With a little strategy and by shifting your mindset you can even fit a brighter financial future into even the tightest of budgets. Curious how? So, let’s pick it down.
Table of Contents
Start with Your Mindset
Now before anything else, forget the notion that you have to average $500 per month automatically being transferred to an account in order to have the money for retirement. Consistently saving $20, $50, you know it adds up over time. If you are in need to persuade yourself to take action, stop telling yourself ‘not enough’ yourself. If you haven’t heard it before, you’ve probably heard that “it’s not about timing the market, but it’s about time in the market.” It’s your golden ticket.
Budget Smarter, Not Harder
It’s not about saying goodbye to lattes or sustenance of instant noodles. If you haven’t heard of this yet, it’s about monitoring what you spend on these small leaks. Do you pay for subscriptions you’re not using? Too often ordering food when you could be preparing a meal for half the price? Get real with your numbers by using budgeting apps or just a simple spreadsheet. It might surprise you what you find.
After you’ve cut away the surplus, put it into a retirement plan. A tiny penny is the $10 a week thing and that adds up over time.
Take Advantage of Employer Benefits
If you’re a working person whose company got you a 401(k) match, that’s free money waiting in front of you. Do you know if you’re taking full advantage of it? You should. It’ll pinch now, but there will be a long term payoff to that.
But what if you’re self-employed or have a small startup? Solo 401(k)s or SEP IRAs are where of that. They’re retirement plans for freelancers and entrepreneurs. They also come with tax perks and who doesn’t love a win?
Of course speaking about financial tools we cannot forget about payroll systems that can make your life easy. On many modern platforms (i.e., the great majority today, in nearly every category of web tool we use) contributions to your retirement account are automatically deducted, no need to manually move money or remember to do it later. If you’re running a company, including retirement options through payroll helps you entice your team to save as well.
Automate Everything
Automation is an absolute secret weapon for consistent saving here. It’s set and forgotten. Automating your savings means removing willpower from the equation, whether it’s a bank transfer into a Roth IRA or a bid through a retirement platform. They say it’s because saving relies on daily motivation, and there was no way most of us were going to make it.
Explore Budget-Friendly Investment Options
If you start investing for retirement, you don’t need a financial advisor or a big brokerage account. You can start small with platforms like Fidelity, Vanguard or apps like Acorns and Betterment and build over time. Shrink your lineup to low turn index funds or target date retirement funds. They’re beginner friendly and created for long term growth.
Feeling unsure? Luckily, many of these platforms provide free educational resources so you can learn as you go, no finance degree math needed.
Have Your Goals in The Forefront?
Emotionally connected to the goal, you’ll find saving much easier. Imagine where you are living and retirement? What happens in your ‘every day’? Who are you around? Heal the world or spoil your grandkids. This is what you have to do to keep that vision in front of you. Even when the budget is tight it’ll keep you motivated.
Don’t Let Perfection Get in the Way
You don’t need the ideal plan, make the most money or have the fanciest investment portfolio in order to save. To start doing something, you don’t need anything. If you’re anything like me, you live by the rule of progress over perfection, always. Saving too little is, in fact, the biggest mistake, not saving at all is.
Final Thoughts
Saving for retirement with a low budget may seem next to impossible, but it’s not. With the proper tools and ways of thinking, together with a little bit of creativity, you can create a future you’re proud of, step by step.
What’s your first move then? Perhaps it’s canceling one subscription, opening a free IRA account or establishing a $10 a week auto transfer. The biggest key here is getting started.
