You can retire earlier. How much earlier depends on what actions you take with your money now.
In today’s society, with so many demands on our money, retiring at all is a challenge. We’re trying to invest for our retirement, help fund our kids’ college educations, save for future health care costs, and pay down debt, all while making the mortgage or rent payment, paying for all of our monthly expenses, as well as saving up for emergencies and vacations!
With so many money distractions, having a system to get on track to retire earlier — and stay on track — can help. A weekly money meeting, an appointment you keep with yourself or your partner if you have one, can be a great start. Setting aside a regular time set aside to focus on your money can help you meet multiple goals.
The actions you take today will help determine your retirement date tomorrow!
During your money meeting, review your short-term and long-term financial goals, examine your past week, and plan for your upcoming week. Each week you’ll track your progress and determine actionable next steps for the future.
Here’s how to start:
For the first meeting, block off two hours. After that, 30 minutes per week, at a specific time, should be sufficient.
Put together a notebook or binder for notes and tracking. If you are paperless, you can set up a file on your computer and review the documents stored there each week.
For your first meeting, prepare a net-worth statement and a monthly spending plan, budget, or list of what you spend.
Then ask yourself these 10 questions and write down the answers in your notebook. Over time, the answers will help you find trends and track your progress toward your larger goals.
My Money Meeting
Q1. What do I want to do in five years that I need to save/invest for today?
In five years, I’d like to have the financial freedom to leave my job and start my own consulting business working 20 hours a week. This would give me time to travel and spend time with family.
In five years, I’d like to take a six-month learning sabbatical (and be prepared financially for it to be unpaid or only 50% paid).
In five years, I’d like to be financially independent and retire!
(To more easily record your answers, download Nancy’s 10 Questions Printable Template here)
Q2. What one major money goal do I want to accomplish in one year?
I want to pay off all of my consumer debt (credit card debt and my car).
I want to be able to live off of 60% of my income to save and invest the other 40%.
I want to be setting aside $300 per month for expected but unpredictable expenses, so I don’t have to put them on a credit card.
Q3. What step will I take this month to move closer to that money goal?
I’ll stop using my credit cards, so no new charges are added. (This will make it easier to pay off that debt!)
I’ll increase my 401(k) contribution to the maximum allowable (or by at least 1%).
I’ll track every dollar I spend this month to see where my money is going.
Q4. What will I learn this week to further my knowledge of money?
I’ll read a chapter of a book on personal finance.
I’ll read a blog post from a financial expert (check this one off, since you are already doing this right now!)
I’ll listen to a course in finance from The Great Courses or a financial podcast.
Q5. Where did my money go last week, and how do I need to adjust for this week?
Take 20 minutes to review your bank and credit card transactions. Did you stay within your spending targets (budget) last week?
Example, in reviewing my spending last week, I realized that I overspent on gifts and splurged for my friend’s birthday, throwing off my budget.
I’ll bring my lunch this week to save on food costs to make up the difference.
Q6. Where will my money go this week?
Review your budget to figure out how much you can spend this week. Set a target an amount for groceries, entertainment, etc.
For example, I have not spent anything on entertainment this month, so this week I can get tickets for an outdoor concert (and choose the type of seats based on my budget!).
Q7. How did I grow my net worth last week?
Did I set aside funds in my emergency fund?
Did I invest money last week?
Did I pay off consumer debt?
Q8. What will I do at work this week to excel (to earn a bonus or promotion)?
Your earning potential is an asset to your ability to build wealth. How are you making yourself valuable to your company to maintain and grow your earning potential this week?
For example, I reviewed my company’s strategic initiatives for the year, and I worked on the company’s most important project this week.
Q9. What big STEP will I make this week?
If you are a late starter to retirement planning, in order to retire earlier, taking big steps, as well as a bunch of small ones, will help you get there.
What big steps will I take to cut expenses, create income streams, or make more money?
For example, I own my home, so I will fix up my basement or guest room and rent out space on Airbnb, VRBO, or to a college student. Then I will invest the difference in a Roth IRA or mutual fund to create an income stream in retirement.
Q10. What will I do this week to get healthier?
Medical expenses are costly now and in retirement. Prevent future expenses by getting as healthy as you can today. To enjoy retirement (or give you more energy if you plan on working part-time in retirement), get healthy and stay healthy now.
As an added bonus, you’ll feel better and have more energy to enjoy life today.
For example, I suffer from chronic sinus infections due to colds and allergies, so I set up an appointment with an ear, nose, and throat specialist to get treatment.
- What will I do to strengthen my closest relationships this week?
Many couples cite finances as the top cause of stress in a relationship. But just setting up a weekly money may help alleviate that stress! If you have a set time to discuss finances (and actually keep that meeting), you are free to enjoy the rest of your time together as a couple.
What will you do with that time? If you are single, your money meeting will also reduce your stress by handling your finances a week at a time. Celebrate by nurturing your closest relationships.
For example, plan a low-cost night out and head to a free outdoor concert with a picnic.
Be a proactive instrument for financial change in your own life. This way, five years from now, you’ll look back at all these steps you’ve taken and be surprised at how far you’ve come.