When you need to find extra money to invest for retirement, the solution may be closer to home than you might think.
A new report from online marketplace OfferUp found 48 percent of Americans said their homes were cluttered with things they don’t use. At the same time, 32 percent of respondents said that they were concerned about not being able to save enough for retirement.
OfferUp CEO Nick Huzar says the relationship between stress and extra stuff is important to understand when you’re seeking a secure retirement.
“Our report showed that many Americans believe they have more than $1,000 in unused items sitting around the house. This is particularly important for people who are retired or who are about to be. You can downsize and find a few much-needed extra dollars by parting with things you’re not using,” Huzar says.
[See: 13 Ways to Take the Emotions Out of Investing.]
If you’re concerned about your retirement outlook, a careful evaluation of your spending habits could prove to be eye-opening. Here are some things to consider as you’re reviewing your cash flow.
Identify your spending traps. Miguel Gomez, a certified financial planner with Lauterbach Financial Advisors in El Paso, Texas, says putting today’s wants ahead of tomorrow’s needs is a pitfall that’s best avoided if you’re hoping to invest for a comfortable retirement.
“This is critical and I’ve seen it many times,” Gomez says. “We simply have a lot of things, most of which lose value very fast, and not a lot of money.”
Trying to keep up with the Joneses is another way to throw obstacles in your investing path, says Vincent Oldre, a certified financial planner and president of Assured Retirement Group in Bloomington, Minnesota.
“Just because your neighbors or your friends have nice cars does not mean they have a lot of money in the bank,” Oldre says.
In the OfferUp report, 14 percent of Americans said they worried about not being able to maintain the same lifestyle as their friends. Among those with children, 45 percent said they cared about other parents’ perceptions of them. That pressure to keep up led parents in the report to favor brand names over buying secondhand, even when they knew it would save them more money.
Cut your emotional spending ties. Emotion-based spending can be one of the biggest dangers to your retirement savings, says Scott Mann, president of Houston-based Mann Financial Group. The threat is magnified for older savers when there are kids in the picture.
“I often meet with people nearing retirement who financially support their adult children. They pay for their kids’ cell phone bills, cars, even apartments and sometimes have inadequate retirement savings because they’re putting their children’s needs first,” Mann says.
He acknowledges that once this kind of spending pattern is in place, it can be hard to break because at the root is an emotional desire to help.
Even when children aren’t in the picture, emotions can still be detrimental if you’re spending money needlessly that could be put to better use in your retirement portfolio. For Gomez, moving away from emotional spending begins with looking at the bigger picture.
“Switch your focus from today to tomorrow,” Gomez says. “Yes, you want that new thing today, but will you remember having it 10 years from now? Will it make a difference in your life or for someone you care about? If the answers are no, then you can probably do without it.”
Look for common ground with your spouse or significant other. Melody Juge, founder and managing director of Life Income Management, which has offices in North Carolina and southern California, points to overspending as a serious problem for couples if it’s not addressed.
Juge advocates creating a written plan for how you’ll spend, as well as how you’ll save for retirement. She says two-income couples have a unique opportunity if they’re able to live off one partner’s paycheck and invest the other.
[See: 20 Awesome Dividend Stocks for Guaranteed Income.]
Divam Mehta, of Mehta Financial Group in Glen Allen, Virginia, says effective communication is essential when one partner is a spender and the other is a saver.
“It’s vital for couples to identify family goals when managing finances jointly,” Mehta says. “One partner is not going to succeed without the other’s commitment to the collective goal of saving for retirement.”
Mann recommends that couples who are having trouble getting on the same page make a wish list of what they want in retirement.
“Thinking critically about what you want and putting it on paper can help bring a sense of realness to retirement planning,” Mann says.
Changing your spending habits is only part of the equation. Identifying problematic spending patterns is a significant first step in meeting your retirement goals. Equally important is having a clear-cut strategy for increasing your nest egg.
Once someone makes the move toward saving, they have to decide how much of their discretionary budget they can set aside for retirement, Mehta says. To keep things simple and make it easier to resist the urge to overspend, he recommends automating contributions to an IRA each month and saving as much as your budget will allow.
“Many people feel that there’s no point in saving small amounts since it’s not going to make a difference in the long run. That line of thinking is completely false,” Mehta says, since even small amounts can lead to a more secure future through the power of long-term investing.
Jay Messing, senior director of planning for Wells Fargo Private Bank in New York, reminds savers to take advantage of tax-deferred accounts and employer matching contributions to qualified retirement plans whenever possible.
He also encourages structuring your investment portfolio according to your risk tolerance and your time horizon for saving. Investing early with a focus on growth can provide a greater potential for accumulating a sizable nest egg.
Ultimately, your retirement investing success comes down to two things: deciding what’s more important — current material goods or future financial security — and making a concerted effort to curb spending.
[Read: 5 Reasons Why You’re Bad at Investing.]
“While it may be a challenge requiring a high level of self-confidence, living below your means is a best practice,” Messing says.
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4 Tips To Keep Bad Spending Habits From Wrecking Your Retirement originally appeared on usnews.com
