Ask a MoneyGeek: How Can I Start Saving for Retirement When I Have So Many Bills?

by The MoneyGeek Team
October 06, 2017

Q: I’m a freelancer in my early 30s and I haven’t really started saving for retirement. I keep meaning to, but it seems that bills and other expenses keep getting in the way. Where should I start?

Gregg Murset, CEO of BusyKid and a Certified Financial Planner, had this to say:

First, realize a lot of people out there are in the exact same situation. One thing I advise is a mindset change: Don’t compare yourself to other savers. It’s hard not to compare yourself with other people, I know – my father-in-law, for example, can fix anything and I’m not handy at all. He happened to spot a broken weed whacker sticking out of our garbage can and couldn’t believe anybody would throw away a perfectly good tool like that when it could be fixed in a snap!

So, if you’re a 30-year-old, it’s important not to compare yourself with a 55-year-old, who may be going out to eat every night or taking cruises. Being a minimalist is kind of cool right now, and we all need to start acting the part. That way you can be cool and cheap at the same time.

The second thing is to make your savings automatic: Set up an electronic funds transfer (EFT) to move the money from your paycheck or checking account into your retirement account each month or it will never happen. And put the money in a retirement account where you can’t get it out. There, it will continue to grow even more thanks to compounding interest.

If you’re worried you can’t afford these automatic deductions, make a budget and figure out what you can do without so you can save. Remember because these are pre-tax dollars, they won’t reduce your take-home pay dollar per dollar. If your company offers matching funds, take advantage of that and contribute the maximum. To me, it’s a no-brainer – it’s free money sitting on the table.

And since you probably do a fair amount of spending, why not make that work for you? There are lots of new apps and mobile sites that will round up every purchase to the next dollar and invest the rest for you. For example, if you spend $12.54 on your debit or credit card, the app will round it up to $13 and put the difference in an index mutual fund of your choice. Acorns is one such app – it gets its name from the idea of squirreling away your acorns – and it makes investing automatic. That way when you have your lunch and latte, you can spend and invest at the same time.

Here’s something else 30-somethings need to rethink: their monthly car payment. Many think they need to spend $500 or $600 a month on their auto loan, while they could get a very reliable car with maybe 150,000 miles on it for $15,000 less. You can get a really good quality used car that you probably won’t need to fix and either have no car payment or a vastly reduced payment. But at least here in Arizona, we have what I call $35K Scottsdale millionaires – people who aren’t millionaires but act like one. It’s the car, the clothes, the daily restaurant meals that are out of control. Most of that money could be going into their savings and retirement account instead.

Remember, it’s not how much you make; it’s how much you spend. The old saying ends “… it’s how much you save.” But the truth is spending and saving are intimately related.

Gregg Murset

Gregg Murset, CFP, CFS, is CEO of BusyKid, a financial app that helps kids do chores while learning how to save, spend, invest and donate to charity. A father of six children, he is also a Certified Financial Planner and consultant in the Scottsdale, Arizona, area who is a strong advocate for financial literacy for children and teens. In 2014 he received the Financial Education Instructor of the Year award from the National Financial Education Council.

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