You know that you should probably be saving towards retirement. Even if you’re young and feel like you’ve got plenty of time to save, it’s important to get started. If you save now, you’re prepared for emergencies, or you could be giving yourself the freedom to retire early and enjoy more time traveling or spending time with family. Still, saving up for retirement sounds difficult and time-consuming, so most people put it off. It’s not as hard as you might think, and you might actually be happier spending less money.
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Hedonic Adaptation
Hedonic adaptation is something built into our DNA that helps us get used to our environment, whatever that environment may be. This is great for when a new ice age comes around, but bad for spenders, because it means that things that used to make you happy stop doing so and you revert back to your natural level of happiness. If you suddenly start making more money, so you stop eating Top Ramen and instead go out to eat at fancy restaurants all the time, after a month or two those expensive restaurant meals will make you just as happy as Top Ramen did. When this happens, most people then start going to even fancier places and spending even more money trying to get that happiness back.
While this may sound terrible, it also works the other way. If you cut back, you may be unhappy about it for a little bit. However, as frugality blogger Mr. Money Mustache puts it, “When moving down the hedonic scale, either voluntarily or involuntarily, we can learn to appreciate simpler things with just as much gusto as we would have appreciated more expensive things.” Even better, things that had become commonplace become exciting rare treats again, making you happier than they would if you experienced them every day.
Budgeting
The first thing you need to do is figure out where all your money goes. You probably know this, but avoid actually doing it because it seems so time-consuming and difficult. However, there are incredibly simple ways to take care of this. Mint.com is a website that aggregates all your financial data for you and allows you to analyze your spending without spending hours with credit card statements and a calculator. You just give Mint the information for each of your bank accounts and credit cards, and it gathers all your expenditures in one place and separates it into like items for you. You may have to make some adjustments if it’s not sure what category something should be put in, but overall, it’s very good at figuring it out for you. Then, you’ll be able to see how much you spend on everything.
Cutting Costs
Now that you know what you’re spending your money on, you can start to cut your unnecessary costs and create more frugal habits. The biggest places most people need to cut their budgets are: cable and phone bills, eating out, and impulsive shopping. You can quickly and easily reduce these by reducing your cable and phone plans to cut out the excess you don’t need, eating at home more regularly, and avoiding shopping unless you have a specific list that you stick to. Many people like to go to a cash-only system so they can keep careful track of exactly how much they have to spend in each category for the month, but once you get into good habits, it shouldn’t be necessary. Once you’re used to making lunches and eating home-cooked leftovers, you’ll enjoy it and want to only go out on special occasions. Once you become aware of your impulse purchases, you’ll be better at turning them down.
Becoming frugal isn’t something that happens overnight, but it is something you can accomplish without that much work. You just need to realize that your happiness doesn’t depend on stuff, find out where your money’s going, and become happy with less. If you can do those things, you can find yourself saving more than you might believe, which could one day lead to working for yourself, staying at home with your kids, or traveling around the world without a care in the world.
About the author: Lindsey Grant and her husband are looking forward to retiring to their country cabin. With the help of http://www.financialcalculator.org/investing/interest-calculator they will be able to live comfortably without worrying about finances.
