When the nest is empty and the kids no longer need financial support, many men and women find themselves with some extra money in their budget. Fewer mouths to feed and no more college tuition bills can give parents a sense of financial freedom they may not have had since before starting their family. But that freedom can also lead to overspending, something that can put retirement in jeopardy if people are not careful.
Though it's understandable for men and women to splurge on a well-deserved getaway once the kids have finally left the house, it's important for adults to ensure that such splurging does not become routine. The following are a few ways men and women with some newfound disposable income can avoid overspending and putting themselves in financial hot water as they get closer to retirement.
* Pay with cash whenever possible. Swiping a debit card or credit card is certainly a convenient way to shop, but it can also be dangerous. Many people find it difficult to keep track of their spending when they use debit cards or credit cards to make their purchases. Using cash to make purchases, especially daily purchases like a morning cup of coffee, reduces the likelihood of overspending. This can help you get a better idea of how much money you're spending and if there are any steps you can take to curtail that spending.
An effective way to use cash is to withdraw money from the bank once per week and use that as your weekly supply of money. If you find yourself frequently running out of money each week, then you're likely spending more than you should.
* Keep a financial journal. Men and women who must adapt to having newfound disposable income may find it is not much different from younger men and women learning to manage their money when they first start working. Some of those lessons, like saving more than you spend, might need to be relearned.
One way to get a grip on your spending is to keep a financial journal to track your daily and monthly expenses as well as larger purchases like a new television. Write down the monthly expenses you know you have each month, such as a mortgage payment or a car note, and each and every purchase you make, including how much you spend on dining out each month. Do this for at least a couple of months. When you have logged several months' activity, examine your journal to see if there are any expenses that can be trimmed to save money.
* Don't go overboard rewarding yourself. Once your last child has left the nest, the temptation to reward yourself with a luxury item or two might prove overwhelming. After all, raising a family and paying for college tuition has no doubt required substantial sacrifice on your part, so it's well within reason that you want to reward yourself after all these years. Avoid overdoing it so your finances aren't stretched too thinly. A vacation with your spouse is reasonable, but buying a villa overseas might be a little over the top. Luxuries can be nice, but they can also drain a budget. Your monthly expenses once the kids have moved out should be lower, so if you find your cost of living has increased now that your nest is empty, you might be forced to determine which of your expenses are luxuries and which are necessities.
* Take advantage of your "experience." Though accepting a "senior" discount might be a blow to your pride, it also can be a boon to your bottom line. Many establishments, including gyms, restaurants and movie theaters, offer discounts to men and women age 55 and older. This can help you save a substantial amount of money over time, and no one has to know you've started cashing in on your experience.