For many people, this is the most challenging change our experts suggested. But it’s also likely the most important thing you can do, says Margot Dorn, a Certified Financial Planner at Dorn Financial in San Diego.
Not only does minimizing spending increase your savings, but it also teaches you to live with less.
“If they learn to live more modestly, they will also not need to save as much to continue their lifestyle in retirement,” Dorn says. “Reducing your lifestyle can be like losing weight. It is difficult for many of the same reasons as losing weight is difficult. Better not to gain it in the first place.”
Not sure where all that money is going? To find out, you’ve got to track your spending, says Andy Tilp, a Certified Financial Planner at Trillium Valley Financial Planning in Sherwood, Oregon.
“List all the expenses and track them over time,” he says. “Once you know where it goes, then you have the information necessary to see if there are places where spending can be diverted to savings. Otherwise, it’s a guess.”