Most of us don’t have the option to suddenly go out and make more money. Either we’re retired on a fixed income, or we’re settled into a job with small and predictable or nonexistent salary increases. So how do you put more cash in your pocket? Work the other side of the equation: Cut expenses.
You can do that one of two ways. You can watch your pennies, never splurge, trade down on food, and beat back any generous impulse you have to overtip or contribute to a charity. Or, instead of penny pinching, you can find clever ways to save money that won’t reduce your quality of life and will still allow you to be expansive and generous. The key is to cut back where it doesn’t hurt, and where you’re paying out, but not getting much back. Here are seven ideas:
1. Go out to lunch. Everyone likes to go out to a restaurant. No one has to cook or do the dishes. The secret ingredient is to go out for breakfast or lunch instead of dinner. You get the same benefits at half the cost. You’re less likely to buy overpriced alcoholic beverages earlier in the day, and you won’t feel like you're a poor pensioner who can only afford to eat dinner at the 5 o’clock special.
2. Don’t pay for stuff you don’t use. Cancel the premium TV package if you really don’t watch much TV. Downgrade your cell phone service if you don’t use the minutes, texting, or data plan. Consider canceling your life insurance if you have no dependents. Cancel your health club membership, and instead take a morning walk around the neighborhood. You might even meet a few neighbors while you’re at it.
3. Forget fees from financial firms. Get rid of check-writing and ATM fees at the bank, annual fees on your credit card, and high expense ratios on your mutual funds. You get no benefit from these charges. And doesn't it make you feel good that you're not letting the bank take advantage of you?
4. If you’re going to gamble, do it with friends, not at gambling establishments like a casino, off-track betting, or state lottery, And certainly don’t gamble through a bookie. They give you crummy odds and take 5 to 10 percent off the top.
5. Buy more things that have gone up less than inflation, and fewer things that have gone up more. One obvious example is technology. You can buy a good computer or TV for half the price you used to pay. You can get a better car for less money than you could 15 or 20 years ago. Meanwhile, spend less on energy, vacations, housing, and health care if you can. The prices for all these items have skyrocketed. Want to go back to school in retirement? Forget the price-gouging private colleges. Your state university is a much better bargain, and community college is even more affordable.
6. Make it a sport. You can buy a book for full price at Barnes & Noble. But you can probably get a better deal from Amazon, Costco, or a used book store. In retirement you have time to look around and compare all the options. Maybe there’s a better price on a website or at an outlet store. Think of bargain hunting as a game. The seller is trying to get you to pay a high price. You’re going for a low price. Play the game, and be a winner.
7. Don’t be embarrassed to use your discount. At age 55 you start getting senior citizen discounts at the multiplex or the municipal golf course. You get more discounts at 62, and again at 65. Get over any reluctance to use these discounts. Nobody else cares how old you are and not speaking up will cost you money.
Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.