Small changes in your monthly spending can add up to big savings in the long run. Most people believe the key to retirement wealth is increasing how much you earn, but Tom Stanley, author of The Millionaire Next Door, interviewed hundreds of millionaires and discovered the secret to their success was not what they made; it’s what they didn’t spend.
Here’s a look at how much money Americans earn over their lifetimes.*
Imagine how much money you could accumulate if you didn’t spend 10% of your income every month and saved it instead!
Tracking Your Spending
Are you ready to spend less and save more? The first step is to track where your money goes each month. Save your receipts or, if you’re a heavy debit card user, go to your online bank statement and categorize every dollar you’ve spent in the last month. How much do you spend on housing, utilities, transportation, clothing, food, and entertainment?
Develop A Budget
Once you have tracked what you’re spending, you will have a blue print to develop a budget. When you write down what you are committed to spending on certain items each month, it gives you a solid plan. Then, throughout the month, reference what you wrote down to help you stick to your plan.
Include Savings In Your Budget
You need to make saving a part of your budget. One of the easiest ways to save is to contribute to the Northrop Grumman Savings Plan. The money is taken out of each paycheck before you are tempted to spend it. If you’re having a hard time identifying extra dollars for saving, consider cutting back your spending with activities like these:
When you take an honest look at what you spend each month, you may find that you can free up at least $30 a month to pay down debt or save more. Small changes to your spending habits really can add up to large savings over time.
As you can see from the chart below, if you give up your habit of having a vending machine soda each afternoon, over time, and with an 8% annual return, you can save nearly a quarter million dollars.
When you track what you really spend, it is possible to find where you spend unnecessarily. The sooner you identify those items, the sooner you can strike them from your budget, and then redirect those found dollars toward your retirement savings.
This Investment Center includes links to tools and information provided by organizations that are not associated or affiliated with Northrop Grumman. The tools and information provided by these organizations are not the property of Northrop Grumman, and Northrop Grumman is not responsible for their accuracy, completeness, or continued availability. You are solely responsible for the investment and asset allocation decisions you make pertaining to your personal savings and investments, including investments in the Northrop Grumman Savings Plan, Financial Security and Savings Program, and any other savings plans sponsored by Northrop Grumman.