Frugal Living For One Person
How to live frugally and plan for retirement.
Good Nelly is a financial writer who has been associated with several financial communities for quite a long time.
She analyzes financial happenings and writes articles to aware and help her readers plan for their financial future. We are so glad to have her a guest blogger this week.
You can find more of her workMy Way of Viewing.
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What Does It Mean To Live Frugally?
Why do we want you to know how to live frugally?
This is because so many young women do not normally think about the future and go about spending money carelessly including myself. The more you can save the better life you will have in the long run.
If you chose to live frugally, this does not mean you are poor in any way. You are just securing a better future by saving all your hard earned money.
“Your pleasure in saving money should be equal to your pleasure in spending money.”
It doesn’t matter whether you are single or married, you’d have to save for your golden days to build a financially secure future.
And one way of doing that is to live frugally.
Tips for a single woman to practice frugal living:
It is not very difficult to save a significant amount of money for retirement.
What you have to do is practice frugal living in order to save more money faster.
Now, it doesn’t mean that you have to compromise everything to save money. In order to have to save a significant amount, you need to avoid unnecessary expenses.
With this post, we are hopping to answer the following questions:
How can I live very frugally?
How can I live and save money more frugally?
What does it mean to live frugally?
Examples of frugal living tips with a big impact
We are hoping by answering these questions, you will have a better understanding on how to save more money, practical tips you can use to be more mindful of your money and the exact steps on what to do next.
Here’s how you can practice frugal living to save money:
Try choosing an apartment with luxury amenities.
Many times, you may unknowingly spend more on your luxury amenities like opting for a sports club membership or enrolling separately for a gym, pool, memberships etc.
However, being a single woman, you can easily save this amount by renting an apartment in a building with the amenities already included.
Moreover, staying in such a place is also great for networking and getting acquainted with your neighbors in order to have a rich social life.
Plan a realistic budgetespecially if you want to live frugally.
You have to plan a budget that can accommodate any increase to your discretionary income.
Usually, people living alone, especially women, tend to spend more on shopping. But the focus today is to learn how to live frugally.
So, plan a basic budget to analyze how much you can save every month to live frugally.
Now, if that amount doesn’t look reasonable in order to build good retirement savings, then you’d have to work on increasing that amount.
Try not to spend more than $100 per week on miscellaneous things or unnecessary items especially if you plan on living more frugally.
Have Home-Cooked Meals Frequently
Having home-cooked food is not only a money saving strategy but also a healthier alternative. Plan your weekly meal prepsand shop only for what you need.
Though you’d have to prepare meals for one, you can make large portions and carry some to work during the week. Learning how to live frugally helps when you make adjustments.
If you can purchase grocery items in bulk without buying unnecessary things.
When it comes to grocery shopping, it always makes sense to buy in bulk especially items you use regularly.
However, before buying in bulk, check things like the expiry dates on the items and be sure that you can consume them before the due date.
How to live frugally – Slash the Extra bills
1// Maybe consider changing your cell phone plan.
Have you ever analyzed whether or not you’ve been paying for an unlimited data when you don’t need it? If so, choose a cell phone plan as per your requirement, and save precious dollars.
2// Negotiate to reduce credit card interest rates.
3// When it comes to saving dollars, every little penny counts; and when it’s about interest rates on credit cards, you’ll save a significant amount if you negotiate for lower interest rates.
4// If you’ve been a loyal customer, then the credit card issuer may lower the rate of interest on your card.
How a single person can plan for retirement
Researchers point out that the singles tend to save less for retirement in comparison to the married couples. Married couples especially those with young families tend to seek out how to live frugally.
As per a research conducted by the National Bureau of Economic Research in 2011, an average married household manages to save about 10 times more when they retire as compared to the single-person households.
The study also pointed out that on a per-person basis, the cost of living for singles is about 40-50% higher than that of married couples.
This is where learning how to live frugally will really count.
One of the reasons may be that the single people have less discretionary income than their dual-income counterparts. And, it is a greater concern for women since they tend to earn less in their jobs and they usually live longer.
Make saving a necessity:
So, being a single woman, you should definitely start to save for retirementearly and make your retirement plan, so that you have enough time to execute it.
Dedicate an account just for retirement and start saving with a small amount. Do not be tempted to use this money.
According to Melissa Motz, president of Motz Wealth Management and a wealth adviser, “Put retirement savings right up there with housing and food as a priority.”
Calculate your net worth
In order to start planning for retirement, you will firstneed to compute your net worth. This means calculating your assets minus your liabilities such as debts.
When calculating assets, consider your house, cash, investments, any other real estate, vehicles, along with any other valuable things.
Though it may seem a bit difficult, it is necessary to plan your retirement and future plans for a secure financial future.
Gather the required knowledge.
Sufficient financial knowledge is a prerequisite to making the right retirement plans. However, as per a survey conducted by Prudential Financial, only 7% of women gave themselves “A” grade when they’re asked about their knowledge of investing.
A study, conducted by TIAA-CREF, revealed that about 63% of women, who received financial advice, felt that they have started saving enough for their retirement.
Plan for your future early
Single people often don’t spend much time planning for retirement as much as most of their married counterparts do. But, it is important to create a vision and work towards achieving it which is done by living frugally to start.
Being single doesn’t mean that you don’t have any other goals. You may want to travel abroad, start your business, etc. where you need a large amount of money.
Create what you want to achieve at retirement and plan out how you are going to attain that.
Build your financial security all by yourself.
You have to plan your retirement as you can’t depend on your spouse’s income. First of all, start by building an emergency fund worth 3-6 months of your living expenses.
It is better if you build an emergency savings fund worth 9-12 months of expenses.
This can be easily done by living frugally and only spending what is necessary.
Along with it, if needed, talk to a financial adviser and discuss how you can build your retirement fund.
Since you’re the only breadwinner, you should also look for long-term-care insurance if live in an area that does not cater to it.
Do not sacrifice your financial security to help others.
A number of women sacrifice their financial security to help others, like their loved ones.
But, especially when you’re single, you should put yourself first and know where to draw the line.
For example, do not stop saving for retirement in order to save for your child’s education. Remember that children can borrow to fund their education but you can’t take out a loan to fund your retirement.
In addition to this, differentiate between good and bad financial advice. And, don’t try to help a family member financially if your financial condition doesn’t permit you to do so.
Do not go beyond your limit.
Everyone at this point would need to learn how to live frugally.
Pay off debt as fast as possible
It becomes difficult to attain your retirement goals with huge amounts of debts to pay off.
So, you should try not to incur debt, especially credit card debt. Always charge your card for an amount that you can repay comfortably at every billing cycle.
However, if you’ve already incurred debt, then you can follow debt reduction strategies to pay it off as soon as possible so that you can focus on saving and investing for your golden days.
You can also read this post where we share how to pay over $10, 000 of debt. Learning how to live frugally means living with what you have.
This will help you avoid the stress of living paycheck to paycheck!
Sort out any legal issues you may have
If you want you can assign durable powers of attorney for both your finances and health.
Doing so, you can ensure that your medical and financial decisions are made by a person you trust instead of a court-appointed guardian or a relative making such important decisions.
Make sure you prepare these legal documents early.
So, what do you think? It isn’t impossible to plan a financially secure retired life and live frugally. So, follow these tips and achieve your financial and retirement goals, one step at a time.
Do you have any questions on how to live frugally and plan for your retirement? We would love to hear from you. Be sure to live us a comment below.
And if you already live frugally, we want to know your tips.
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You'll save money on property taxes, maintenance and utilities. If you're still a two-car family, retirement is the perfect time to whittle that down to one, since it will save money on gas, insurance and maintenance.How do you live a frugal retirement? ›
- Get a Roommate or Two. ...
- Downsize to a Smaller Space. ...
- Rent Out Your Kids' Old Rooms. ...
- Cut the Cost of Groceries. ...
- Save Money on Health Care. ...
- Find Low-Cost Entertainment and Ways to Stay Social. ...
- Save Money on That Bucket List Trip. ...
- Take Advantage of Discounts.
- Monitor your investments in pre-retirement. Money needed 5-10 years into retirement is most vulnerable, so avoid overspending. ...
- Plan for inflation as a fact of life. ...
- Talk with your spouse or significant other about retirement spending. ...
- Focus on physical health.
- Focus on starting today. ...
- Contribute to your 401(k) account. ...
- Meet your employer's match. ...
- Open an IRA. ...
- Take advantage of catch-up contributions if you're age 50 or older. ...
- Automate your savings. ...
- Rein in spending. ...
- Set a goal.
- Downsize Your House — and Your Life. ...
- Pick Your Next Location With Savings in Mind. ...
- Or, Stay Where You Are and Trade Your Equity for Income. ...
- Get the Most Out of Healthcare Savings Programs. ...
- Delay Retirement — and Social Security. ...
- Invest In Professional Help.
A good retirement income is about 80% of your pre-retirement income before leaving the workforce. For example, if your pre-retirement income is $5,000 you should aim to have a $4,000 retirement income.What is the smartest way to retire? ›
- Defined contribution plans.
- IRA plans.
- Solo 401(k) plan.
- Traditional pensions.
- Guaranteed income annuities (GIAs)
- The Federal Thrift Savings Plan.
- Cash-balance plans.
- Cash-value life insurance plan.
- Plan your meals in advance. ...
- Grow your own herbs and vegetables. ...
- Opt for less expensive cuts of meat. ...
- Buy store brands and generic labels. ...
- Compare unit prices; for example, look for the price per ounce or pound. ...
- Eat out less. ...
- Freeze meals for later.
Expect to spend 55%–80% of your current income annually in retirement.What are the 3 buckets for money for retirement? ›
The retirement bucket strategy divides your retirement income into three buckets: short-term needs, mid-term needs and long-term needs. The goal is to have your income needs always met, regardless of market volatility.
- Mistake #1: Failing to take full advantage of retirement saving plans. ...
- Mistake #2: Getting out of the market after a downturn. ...
- Mistake #3: Buying too much of your company's stock. ...
- Mistake #4: Borrowing from your QRP.
30% of your income goes to housing; 30% to necessities, such as food and utility bills; 30% to financial goals, such as paying debts or saving money; 10% goes towards wants, such as entertainment and dining out.What is the 25x rule? ›
The 25x Rule is simply an estimate of how much you'll need to have saved for retirement. You take the amount you want to spend each year in retirement and multiply it by 25. Generally, you can look at your current salary to get an idea of how much you might be able to comfortably live off in retirement.Is it better to have a 401k or IRA? ›
The 401(k) is simply objectively better. The employer-sponsored plan allows you to add much more to your retirement savings than an IRA – $20,500 compared to $6,000 in 2022. Plus, if you're over age 50 you get a larger catch-up contribution maximum with the 401(k) – $6,500 compared to $1,000 in the IRA.What is the 5 30 rule? ›
The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do. The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.What happens when you are old and have no money? ›
Another good place to check is your regional Area Agency on Aging, where you might find assistance can come in the form of home care, food delivery, check-ins, transportation, or another essential service.How much money should you have to retire at 65? ›
Retirement experts have offered various rules of thumb about how much you need to save: somewhere near $1 million, 80% to 90% of your annual pre-retirement income, 12 times your pre-retirement salary.What happens if I run out of money in retirement? ›
You'll have to go back to work
If you run out of money in retirement, you will need a way to make extra money. The best way to do that may be to get a job. That can be a tough decision to make if you've been retired for several years.
The 4% rule is easy to follow. In the first year of retirement, you can withdraw up to 4% of your portfolio's value. If you have $1 million saved for retirement, for example, you could spend $40,000 in the first year of retirement following the 4% rule.What is the average 401K balance for a 65 year old? ›
That adds up to $2,096.48 as a monthly benefit if you retire at full retirement age. Put another way, Social Security will replace about 42% of your past $60,000 salary. That's a lot better than the roughly 26% figure for those making $120,000 per year. How bend points work.What is the healthiest age to retire? ›
67-70 – During this age range, your Social Security benefit, if you haven't already taken it, will increase by 8% for each year you delay taking it until you turn 70.What is the cheapest way to retire? ›
- Pay attention to your spending.
- Set aside funds for unexpected costs.
- Plan meals in advance.
- Live in a low cost setting.
- Opt for secondhand items.
- Explore cheaper travel options.
- Maintain your current household.
- Create or Update Your Retirement Budget.
- Adjust Your Portfolio for Income.
- Learn How Medicare Works.
- Refinance Your Mortgage (Maybe)
- Decide When to Claim Social Security Benefits.
- Determine How You'll Spend Your Time.
Following Singapore, the top 10 most frugal countries are:
- Saudi Arabia.
- Czech Republic.
- South Korea.
- Eat Out Less Often. ...
- Buy Used. ...
- Use a Purchase Waiting Period. ...
- Adjust Your Thermostat. ...
- Opt for Generic. ...
- Buy for Life. ...
- Use Your Local Library. ...
- Good Credit Brings More Savings.
Definition of Frugal Behavior. Frugal behavior implies a voluntary, deliberate, and proactive decision, not tied exclusively to circumstances associated with the economic structure and financial conditions (Muiños et al., 2015).What is the biggest expense in retirement? ›
- Hidden housing costs. Nearly 80% of those ages 65 and older own their homes, according to the Joint Center for Housing Studies of Harvard University. ...
- Uncovered health care. ...
- Long-term care. ...
- A child in crisis. ...
- Losing a spouse.
Nationally, a little more than 15 million homeowners 55 to 74 years old don't have a mortgage compared to about 17.7 million who do.What are the two most popular personal retirement plans? ›
Some of the best individual retirement plans are individual retirement accounts (IRAs), which include traditional IRAs, Roth IRAs, and spousal IRAs. Anyone that earns income can open these on their own. The best employer-sponsored retirement plans include 401(k)s and 403(b)s, and 457(b)s.
One rule of thumb is that you'll need 70% of your pre-retirement yearly salary to live comfortably. That might be enough if you've paid off your mortgage and are in excellent health when you kiss the office good-bye.What is the 75 rule for retirement? ›
55 & 15—Be at least 55 years old and complete at least 15 years of eligible service. Rule of 75—Satisfy the requirements of the Rule of 75, which means the combined total of your age plus your length of service (both calculated in completed, whole years) is equal to or greater than the number 75.How much should a 55 year old retire with? ›
Experts say to have at least seven times your salary saved at age 55. That means if you make $55,000 a year, you should have at least $385,000 saved for retirement. Keep in mind that life is unpredictable–economic factors, medical care, and how long you live will also impact your retirement expenses.What are the 13 retirement blunders? ›
- No Retirement Savings.
- Not Saving Enough.
- Saving Without a Plan.
- Stashing Money in a Savings Account.
- Relying on a Spouse. Money Mistakes at Work.
- Not Contributing Enough for Company Match.
- Leaving a Job Before Vesting.
- Holding Too Much Company Stock. Poor Money Management Decisions.
Some common retirement mistakes are not creating a financial plan and not contributing to your 401(k) or another retirement plan. In addition, many people take their Social Security distributions too early, don't rebalance their portfolios to match risk tolerance, and spend beyond their means.What are the 5 risks of retirement? ›
- Health Care Expenses.
- Asset Allocation.
- Excess Withdrawal.
You should be spending no more than 30% of your gross income on a monthly mortgage payment, have at least 30% of the home's value saved up in cash or semi-liquid assets, and buy a home valued at no more than three times your annual household gross income.How much money should you have by 30? ›
Here's how much cash they say you should have stashed away at every age: Savings by age 30: the equivalent of your annual salary saved; if you earn $55,000 per year, by your 30th birthday you should have $55,000 saved. Savings by age 40: three times your income. Savings by age 50: six times your income.How much of your net worth should you spend on a down payment? ›
It's usually a good idea to put 20 percent down, if you can afford it, but depending on how the rest of your net worth is allocated, more may not necessarily be better.What is the 591/2 rule? ›
In order to guarantee that the benefits of IRAs are used solely for retirement, the IRS imposes age limits on these accounts. Unless users are willing to incur a 10% penalty, IRA assets are not accessible until age 59 and a half.
Key Takeaways. Rental real estate can be a good source of retirement income. The relative inefficiency of the real estate market can produce bargains that offer strong returns. If you need to borrow to buy a rental property, do so before you retire.What is the 10 10 10 money Rule? ›
Invested by business writer Suzy Welch, the 10-10-10 rule says that before making any decision, take time to ask yourself three questions: How will we feel about it 10 minutes from now? How about 10 weeks from now? How about 10 years from now?What is safer than a 401k? ›
Roth IRAs. SEP IRAs. Cash-Balance Defined-Benefit Plan. The Investment Account.What is a better plan than a 401k? ›
Good alternatives to a 401(k) are traditional and Roth IRAs and health savings accounts (HSAs). A non-retirement investment account can offer higher earnings, but your risk may be higher, too.What grows faster 401k or IRA? ›
And between the end of last year and 2022, the money invested in IRAs is expected to grow at a faster pace than 401(k)s, with IRA assets jumping 37 percent to $12.6 trillion. That compares to an estimated 20 percent rise in 401(k) assets to $6.6 trillion.Is saving 1000 a month good? ›
If you start saving $1000 a month at age 20 will grow to $1.6 million when you retire in 47 years. For people starting saving at that age, the monthly payments add up to $560,000: the early start combined with the estimated 4% over the years means that their investments skyrocketed nearly $1.How much should your bills be a month? ›
When it comes to how much you should spend and save each month, NerdWallet advocates the 50/30/20 budget. With this formula, you aim to devote 50% of your take-home pay to needs like rent and insurance, 30% to wants like gym memberships and vacations, and 20% to debt repayment and savings.How much savings should I have at 50? ›
One suggestion is to have saved five or six times your annual salary by age 50 in order to retire in your mid-60s. For example, if you make $60,000 a year, that would mean having $300,000 to $360,000 in your retirement account. It's important to understand that this is a broad, ballpark, recommended figure.How much do you need to retire frugally? ›
Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement.How much do I need to retire frugally? ›
The 25 times rule states that you need to save 25 times your annual expenses to retire. Note that is not 25 times your annual income, but 25 times your annual spending. If you think you'll spend $60,000 in retirement than you would need about $1,500,000 ($60,000 X 25) to fully fund your retirement.
Yes, you can! The average monthly Social Security Income in 2021 is $1,543 per person. In the tables below, we'll use an annuity with a lifetime income rider coupled with SSI to give you a better idea of the income you could receive from $500,000 in savings.How long will $500000 last retirement? ›
If you retire with $500k in assets, the 4% rule says that you should be able to withdraw $20,000 per year for a 30-year (or longer) retirement. So, if you retire at 60, the money should ideally last through age 90.Can I retire at 60 with 500k? ›
With some planning, you can retire at 60 with $500k. Keep in mind, however, that your lifestyle will significantly affect how long your savings will last. If you're content to live modestly and don't plan on significant life changes (like travel or starting a business), you can make your $500k last much longer.At what age can you retire with $1 million dollars? ›
Yes, you can retire at 55 with one million dollars. You will receive a guaranteed annual income of $56,250 immediately and for the rest of your life. This income will stay the same and never decrease.