Learning to manage your spending habits

  • If you are spending more than you earn, there is no possibility of having money to save.
  • If you don't know what you spend, you won't know how much you will need each year in retirement.

Becoming a good spender of money and making the transition to saver is the biggest challenge you will face.

How do you find $10 to save?


The Bucket

Your bucket is the representation of your retirement.


  • The Outside - what you see yourself doing in retirement.
  • The Inside - the sources of income used to pay for your retirement.
  • The Handle - your bucket is your responsibility.


If you are just starting out, your bucket may be blank on the outside and empty on the inside. If you want to retire someday, what should you do first: Paint the outside or begin to fill the inside? The answer is a combination of both.

It's logical that if you are 40 years away from retirement it will be hard for you to visualize what it is you want to be doing when you get there. Think about what you enjoy now and how you spend your money today. Those are the beginnings of the outside of your bucket. As you age, your visions may change and so can the outside of your bucket, but at least you have a starting point.

Now comes the hard part. Are those things that you enjoy spending money on today preventing you from filling the inside of your bucket? In other words, is your current spending preventing you from saving?

Today vs Tomorrow

Maybe you've seen the videos of children who had their choice of some candy now or a lot of candy later. We all face the same choices when it comes to filling our bucket - spending a few dollars today or having more dollars later.

Let's discuss $10. Look around and see what that might buy today. Two coffees at that one place or two value meals at that other place. $10 won't fill up the gas tank nor will it allow you to take a date to the movies. In the grand scheme of things, $10 is not a lot to spend.

Let's discuss $520. Sounds better already doesn't it? That's simply $10 per week for one year. If you decided to spend it after one year, you probably could find something better to purchase than 104 coffees. Imagine the date you could go on for $520? And if you decided to save it rather than spend it, how much could it be after 10 or 20 years?

These are the beginning stages of making the income on the inside of your bucket accomplish the dreams and desires on the outside of your retirement bucket. But what if you don't think you can find $10 to save?

The $10 Experiment

Make a $10 wager with yourself that you can find $10 that you don't need to spend. The easiest way to find money to save is to create a budget of your spending.

A beginning budget doesn't have to be complex. You know how much you normally get paid each month, so start there. You should have a good grasp on all fixed monthly expenses (house/rent payment, car payment, utilities, insurance, etc.). Add those big monthly expense items together and subtract them from your monthly income, and that will leave you an amount to spend on "other" items.

Typically, "other items" will be the area where most people are able to find a few dollars. $20 from the ATM - where did that money go? Are you eating out when you could be bringing your lunch? Are there places where you are "doubling up?" Home phone and internet coupled with a mobile phone and unlimited data? Everyone's situation will vary, but it should be fairly easy to find a few dollars here or there.

Don't let this $10 experiment be a one week or one month project. Get into the habit of knowing where you spend your money. Can you win the wager with yourself? If so, you've found $10. If you lose, you owe yourself $10. Save that.

Transition to a Saver

Finding $10 may not be hard to do, but saving $10 per week in your retirement plan probably is not what you had in mind over the long run. Creating a spending plan that allows you to paint the outside of your bucket with all of your retirement dreams is what we are trying to accomplish. In order to do that, you are going to have to find more money to save.

Soon you will need to find an additional $10 per week in your budget, and then $20, $30 and so on. This may sound odd coming from a retirement planning institution like NestEgg U, but once you find that additional $10, is your first priority to save? Maybe not. Outstanding debt can be a killer to retirement planning. Most of us are going to carry some debt throughout our lives - a mortgage, credit card balances, braces for the kids, but we need to keep it limited. If you find yourself with too much debt, your first priority needs to be debt reduction. This will give you a better chance to have more dollars to save in the future.

Save a little, reduce a little debt. Save a little more, reduce a little more debt. Soon your outstanding debt will be reduced and maintained at a level that is comfortable for your budget, and you can start putting more and more in your retirement bucket so you can achieve all of your goals and dreams.


4 Goals

Small strokes make large paintings. Even the smallest change in spending habits can have an impact on your retirement dreams. Making the connection between your dreams and the things that are preventing you from getting there is an important first step.

Print the entire sheet. Put it on your refrigerator, in your desk drawer, or someplace where it will remind you what you are trying to accomplish. Take it a step further and identify the most important item and use the small clip out section at the bottom. Put that in your wallet.

What are 4 things you would like to do when you retire?

Download 4 Goals Worksheet

Create a Budget

We all need to create and maintain a budget. A beginning budget can be as simple as identifying your income (paycheck) and larger expenses (rent, food, utilities, transportation, etc.). Add those big monthly expense items together and subtract them from your monthly income, and that will leave you an amount to spend on "other" items. Typically, "other items" will be the area where most people are able to find a few dollars.

We encourage you to download the worksheet, fill it out and examine just how your monthly income is being spent.

Download Budget Worksheet

Ready to move to the next course?
Spender > Saver > Investor > Planner