My grandpa was a man of few words. But one phrase he often repeated was, “Take care of your pennies, and your dollars will take care of themselves”.
What he meant was that if you develop smart habits with the small things, the big things will eventually fall into place.
And, it turns out, he was onto something.
According to psychology, people who never have to worry about money in retirement often display certain habits throughout their life.
It’s not so much about winning the lottery or inheriting a fortune. But more about making small, consistent choices that lead to financial stability in the long run.
And no, it’s not necessarily about having a high-paying job or being a workaholic either.
Keen to know what these habits are?
In this article, we’ll explore seven such habits that could set you on the path to a worry-free retirement.
1) They start saving early
My grandpa began saving for retirement in his early 20s. Yes, you read that right. His 20s.
And psychology backs up his strategy.
The earlier you start saving, the more time your money has to grow. This is due to a magical thing called compound interest.
But it’s not just about the math. Starting early also cultivates a habit of financial discipline, which is crucial for long-term financial stability.
So, whether you’re earning a lot or a little, make it a habit to set aside a portion of your income for your future self.
It’s not about how much you save. It’s about making savings a consistent habit. Every little bit helps!
2) They live within their means
I remember when I got my first paycheck. I was so excited that I went on a shopping spree and blew it all in one weekend.
Big mistake.
People who are financially stable in retirement don’t live paycheck to paycheck. Instead, they live within their means.
This doesn’t mean they don’t enjoy life or treat themselves occasionally. It just means they’re mindful of their spending habits.
They prioritize needs over wants, and they understand the value of delayed gratification.
Over the years, I’ve learned to adopt this habit too. It’s not always easy, but it’s definitely worth it.
So, next time you’re tempted to splash out on something you don’t really need, remember: a penny saved is a penny earned.
3) They have a plan
You know, I’ve always thought of myself as a free spirit. I was never one for planning or setting long-term goals.
But when it came to money, I realized that not having a plan was like trying to navigate a ship in the dark.
It wasn’t until I met my friend Sam, a financially savvy retiree, that I truly understood the power of planning. He didn’t have a six-figure salary or a trust fund. But he always had a clear financial plan.
He knew exactly how much he needed for retirement, how much he could spend each month, and where to invest his savings to maximize returns.
The truth is, it’s not enough to just save money. You need a solid financial plan that takes into account your income, expenses, savings, and investments.
Having a plan gives you control over your finances and reduces the stress and uncertainty of the future.
Get out your pen and paper (or your favorite budgeting app) and start planning your financial future. Trust me, your retired self will thank you.
4) They educate themselves about money
My friend Lisa is one of those people who seems to have it all together when it comes to finances.
She’s not a financial advisor or a Wall Street expert. She’s just a regular person like you and me. But what sets her apart is her knowledge about money.
Lisa spends time educating herself about personal finance. She reads books, listens to podcasts, and attends seminars on the subject.
And you know what? It pays off.
She understands how different investments work, she knows how to make a budget and stick to it, and she’s always aware of where her money is going.
Guess what? You can do the same.
There are countless resources out there to help you understand the ins and outs of personal finance. The more you know, the better decisions you’ll make, and the more financially secure you’ll be in your retirement.
Invest some time in your financial education. It might be the best investment you ever make.
5) They avoid debt like the plague
Years ago, I read a book called The Richest Man in Babylon that dramatically changed my perspective on debt.
One of the book’s key lessons is that debt is like a heavy chain that can keep you from achieving your financial goals.
And here’s the thing.
According to a report by the Stanford Center on Longevity, people who enter retirement debt-free are more likely to maintain their financial stability than those who don’t.
That doesn’t mean you should never borrow money. Sometimes, taking on debt for things like education or a home can be a smart move.
But as a habit, financially secure retirees avoid unnecessary debt. They pay their bills on time, they use credit cards wisely, and they try to pay off their mortgage before retirement.
Debt can be a useful tool when used wisely, but it’s not something to take lightly. So, avoid it as much as possible, and if you do have debts, make a plan to pay them off as soon as you can.
6) They give back
When I was going through a tough time financially, my neighbor, Mrs. Wilson, helped me out. She didn’t lend me money or give me a job. Instead, she shared her wisdom about money management with me.
She believed in the idea of giving back, not just in terms of money, but also time and knowledge.
And surprisingly, this habit is common among those who are financially secure in their retirement.
Giving not only contributes to a sense of community and connectivity but also puts your own financial situation into perspective. It reminds us of the value of money and the importance of managing it wisely.
So, consider giving back in your own way. It could be donating to a cause you believe in, volunteering your time, or sharing your financial wisdom with others.
True wealth isn’t just about how much money you have, it’s also about how much you can give.
7) They embrace a simple lifestyle
I once met a man named Jake at a coffee shop. He was in his 70s, but he had the energy and enthusiasm of a 20-year-old.
Jake was comfortably retired, but he wasn’t living in a mansion or driving a luxury car. Instead, he chose to live simply.
He didn’t need expensive gadgets or designer clothes to be happy. He found joy in simple pleasures like reading, walking in nature, and spending time with friends and family.
This choice to live simply allowed him to save more, spend less, and ultimately retire without financial worry.
So, take a leaf out of Jake’s book. Embrace simplicity. Find happiness in the small things.
And remember, the goal isn’t to make a fortune. It’s to live a life that’s rich in experiences, relationships, and peace of mind.
Final thoughts
It’s okay if you’re not doing all of these things right now. The first step is simply awareness. Start by identifying which of these habits you already have and which ones you might want to work on.
Then, take small steps towards change. Maybe it’s setting up a savings account, or perhaps it’s spending an hour a week reading about personal finance.
It’s not about perfection. It’s about progress.
Every step you take towards embracing these habits brings you closer to a secure and worry-free retirement. And isn’t that something worth striving for?
So, take a moment to reflect on what you’ve learned today. Which habit will you work on first? How will you start your journey towards financial stability?
The path may not always be easy, but with determination and consistency, we can all create a future where money in retirement is one less thing to worry about.
