Things are different when you retire. Many of your expenses drop, your priorities change and you’ll have time to shop for bargains and to make a lot of the things you used to pay for. Depending on where you live and what benefits your government gives its seniors, you’ll have to look at your budget now and make all the necessary changes. In Australia, when you’re on an age pension, you get discounts on your property rates, ambulance subscription, public transport, telephone charges and pharmacy costs. Hanno and I decided to keep our private health insurance, even though it’s expensive, as it gives us peace of mind to know that we can get medical help, choose our own doctors and go to hospital if we need to without having to go on a waiting list. You may decide differently – it’s up to you.
Before you sit down to redo your budget, find out exactly what you’re entitled to and claim it – it’s one of the many reasons you’ve been paying tax all these long years. There are other benefits too: recently I parked my car in a senior’s parking spot for the very first time. It was close to the front door of the place I was going to. I felt like a bit of a fraud, to tell you the truth, but the sign said ‘senior parking’ and I am a senior so I parked there. Nice. Check out the businesses in your area as well, because many give seniors’ discounts.
Your daily work
In the months before you retire, start thinking about what you’ll do every day when you stop working for a living. If you’ve always gone out to work you might find it difficult to adjust, but if you have something planned, whether it be home-based, volunteer-based or out in the community at a club or library, you won’t be sitting there on the first day wondering what to do.
Hanno and I are as busy as we want to be. We decided to be productive in our retirement, to grow as much food as we could and to find as much contentment and happiness doing that as we could. That involves all sorts of home-based tasks like house maintenance, gardening, cooking, baking, recycling and mending. Living like this gives our days variety and interest, and even though we’ve been working away here for several years now, it still feels fresh. We take breaks whenever we want them; we take days off and sometimes we go for a drive to a nearby country town. It’s a peaceful and rewarding life full of the enrichment that comes from being active and self-reliant.
If you have the opportunity to do voluntary work in your community, grab it with both hands. In my experience, it has been rewarding and life-changing.
Your history
I believe it is my duty as an older woman to pass on what I know to those younger than I am. Older people are our connection to the past and if we don’t tap into that, many traditional skills and memories will be lost. If you still have older relatives, ask them about your history. Even if you’re not interested now, I guarantee there will come a day when you will be interested and if your loved ones are gone then, you will never know. Write down what they tell you so you can pass your family history on to your children.
And speaking of history, get rid of everything in your home that you don’t need. Ask your family if they want that extra set of dinnerware. Donate old clothes to charity.
Your health
Stay active and look after your health because things can come back to bite you in your sixties and seventies. I have been lucky so far – I haven’t had any health issues and am confident that I’ll be out in the backyard in my eighties, yelling out: ‘Hanno, the magpie geese are back!’ Exercise your mind every day, keep learning new things, and stay connected with your family and friends. Aim to be a valuable member of your community by continuing, or starting, voluntary work at your local school or neighbourhood centre. Continue to cook from scratch and eat wholesome food. Even if it’s for you alone, it’s important that you eat well and drink plenty of water every day.
Many people have an unrealistic idea of old age. They think we oldies are helpless and feeble and not capable of much. We may not be able to lift what we once did and we may be taking a nap after lunch, but we’re still waking up every morning eager to get stuck into our tasks and get as much from the day as we can. I believe that if we stay active, in mind and body, we will live to a grand old age in our own home. I think the key to this is to have a good relationship with your family so you have their support if you are ill or have some heavy work you need help with. If you aren’t in the best of health, you may want to move closer to your children or even move in with them.
Don’t be scared of ageing. If you’re in good health you’ll have many years as a senior and they can be wonderful years. Older age has many rewards, and retirement – and the freedom that comes with it – is one of life’s golden eggs.
Quick tips for retirement
Remain active and involved. Do some classes if you have special interests.
Volunteer in your community – this will open up a whole new world for you.
Eat well and make sure you have one good meal every day. The rest of the time you can live very well on fruit, water and tea and toast.
Have regular medical check-ups.
Remember you’re not perfect. That is a good thing.
Don’t cut yourself off from family and friends.
Put your feet up and relax. Read, knit, do some research, enjoy the grandkids, travel, join a club, study or teach. Whatever you spend your time on now, enjoy it. You deserve it.
The rest of the book will focus on things you can do at any age, but here are some quick tips to get you going.
Learn how to write a budget and stick to it.
Shop wisely. You don’t need everything you want.
Learn how to cook from scratch. Over the years it will make you healthier and it’s much cheaper than relying on convenience food and fast food.
Learn to bake. It’s a lot of fun and people will love you for it.
Learn how to stockpile groceries and store food.
Plan your menus.
Plan your grocery shopping.
Pack lunches for work and school. Buying lunch every day is an unnecessary expense.
Learn how to sew, knit and mend.
Try to cut back on your phone and internet bills.
Take water with you when you go out.
If you have some outdoor space, use it. Learn to grow food.
Learn how to preserve or freeze your excess food.
Read.
Disregard advertising. It is there to create an insatiable want in you. Don’t give it any power; march to the beat of your own drum.
Reuse, repair and recycle.
Get enough sleep.
Learn how to make your own green cleaners.
Learn how to read your electricity and water meters. That skill will help you save a significant amount of money and natural resources over the years.
Look for entertainment that is free or close to it.
Don’t aim for perfection; expect to make mistakes and learn from them when they happen. All mistakes are learning opportunities.
Always support your family and friends and be kind to yourself.
Look on Freecycle (freecycle.org) or ask around when you need something. You may be able to swap or barter for what you need.
Dry your laundry outside whenever possible. If you don’t have a washing line, string one up.
Keep learning new skills to support the life you want.
Stay focused on the changes you want to make in your life.
Selling your life hours
If you’re working for a living, or your partner is, then you are selling life hours for money. Each year has only 8760 hours in it, giving us – if we live to be eighty years of age – just over 700 000 hours in an entire lifetime. There are only 168 hours in a week, and you sleep for about fifty of them, so you have to be sure that the life hours you sell give you the best value. Wasting money or hours cheats you of your life.
‘The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.’
Henry David Thoreau
> Think about your money in terms of the hours spent earning it. When you realise that what you buy costs the hours of your life that you spent earning that money, you will be ready go to the next level of creating a budget, spending less, and planning your financial future. If you have debt you might make a decision to not accumulate any more and to work out a plan to be debt-free as quickly as possible. If you can start saving and focus on paying off debt, wonderful rewards will come your way because making that last payment on your mortgage or credit cards will be one of the most memorable times of your life. On that day you will become genuinely independent and you’ll live better and breathe easier because of it.
We must have money for food, shelter, clothing and the practicalities of life, but life isn’t just about day-to-day living; it’s also about joy.
When you’re debt-free you’re not beholden to anyone or any bank, and your life decisions are based on your needs and not the need to repay monies owed. You can cut down your working hours, if that is what you wish to do; you can continue working because you enjoy it or you can save for your retirement, education or travel – or whatever is really important to you and your family. The focus here is to identify your priorities. What do you love doing? What makes you feel really alive? What excites you and makes you jump out of bed in the morning? Whether it be cycling, reading, painting, going to the movies, travelling, learning, cooking, looking after pets, or anything else, those are the things you should save for. Simple living isn’t about spending nothing at all and making yourself miserable because you’re frugal; it’s more about living within your means and not wasting your hard-earned money on things you don’t want or need.
Don’t let anyone convince you that you should never spend on the profound or pleasurable. We must have money for food, shelter, clothing and the practicalities of life, but life isn’t just about day-to-day living; it’s also about joy. If your particular joys cost money, include them in your budget and save for them with your other expenses.
A change in attitude
Back in my spending days, credit-card debt and a mortgage were big parts of my life. I didn’t take much notice of it at the time because shopping gave me otherpriorities, but while I was working to pay off what I owed, I was building even more debt. I thought it was normal to have everything I wanted, that debt was a part of every life. We are encouraged to think that way. The average Western lifestyle always gives you new things to crave; it keeps encouraging you to spend beyond your means. That will never change. You have to change instead.
We cleared our debt by only buying essentials. We stopped using our credit cards and paid them off, then kept only one for emergencies. When the cards were paid off, we put all our spare money into our mortgage and paid it off in eight years, rather than the twenty years we had signed up for. Instead of making monthly payments, we paid fortnightly. That alone knocked several thousand dollars off our interest payments. It wasn’t easy, but starting was the hardest part, and it got easier as we realised how much we were saving in interest.
Our other small steps were to stockpile groceries, grow vegetables, cook from scratch, stop buying convenience foods, and stop eating out except on special occasions. We cut our grocery bill in half, then in half again. We monitored our electricity and water meters, we checked bills and bank statements as they came in. (Yes, we found mistakes. Always check.) We sold our second car, got rid of pay TV and stopped buying all those little things – like magazines, cups of coffee and bottles of water – that cost a lot of money over the course of a year. All those small steps allowed us to pay off our debts and reclaim our lives. You can do the same thing.
Being a spender is not sustainable unless you are incredibly wealthy – and even then it’s pointless to spend just because you can. Simple living allows you to have what you need to live well, but within a frugal framework that encourages thrift, reusing, recycling, cutting back, and being aware of your impact on the environment. Within your new frugal framework it will be possible to build a rich life and find real happiness, but it will not come easily. Changing to this lifestyle requires a period of readjustment, in both attitude and behaviour. If you are like I used to be, and have been spending on whatever your heart desires, this period could be painful. You might fail a few times, and that’s okay. You need to be strong. Just start again and don’t let it beat you.
The key to money management
I have no doubt there are many effective ways to manage money but I am going to explain how we do it. Naturally it’s a simple method; it requires a change of attitude from that of a consumer to that of a conserver, and it utilises and celebrates thriftiness. Money management is not my favourite topic but over the years I’ve come to realise that if we get the money right, everything else becomes much easier.
One thing stands out now just as much as it did when I first started taking my finances more seriously. The key to money management is simply this: spend less than you earn. If you can do that over a long period of time, no matter how much or how little you earn, you’ll be in a good financial situation. The principle applies if you’re earning hundreds of thousands of dollars a year or if you’re on a pension.
Most of us know people who have gone broke despite earning a lot of money. Just think of all those celebrities who have declared bankruptcy despite earning millions of dollars. I know a couple whose household income was $200 000 a year for a number of years, while the rest of our circle made much less. That couple was always in debt – even though they earned a lot of money, they consistently spent it all, and then some. They ended up divorced and bankrupt.
The key to money management is simply this: spend less than you earn.
Hanno and I live by the 80/20 rule: we live on 80 per cent of our income and save 20 per cent. Our income is about $1700 a month, and we save around $350 a month. We live frugally, we have no debt, we buy second-hand and look for bargains when we need anything, but we live well; we’re not mean-spirited or stressed by money and we feel satisfied and enriched by our life choices. Remember, it doesn’t matter what amount of money you earn; the key to being financially secure is to spend less than you earn, and to do it consistently over the years.
Next I’ll describe the five steps you can take towards debt-free living. The steps are quite simple but contain several elements and will need some thought about how to include them in your life. Managing your money well is one of the key components of a simple life and it will take time and effort, but if you can do it – if you can consistently spend less than you earn – you will notice a real difference.
The first step in the process of cutting back and working towards a simple life is to track your spending. I doubt there is anyone who hasn’t wondered at some point where his or her money went. Most of us know how much we earn in a week but few of us have a realistic and accurate idea of how much we spend, or what we spend it on. Often we’re so tied up with work, the children, or things that are happening in our lives that we spend without knowing it. We may also be spending small amounts frequently without thinking how those small amounts add up over a longer period. Tracking your money will help you discover what your priorities are and what your current spending patterns are. You can then use that information to change habits and focus on positive spending, like debt reduction.
How to track your spending
Take a small notebook and pen with you wherever you go and every time you buy something, write it down in your notebook. When you and your partner are both tracking your spending, both of you need to record everything you spend. You must be honest and consistent, and record everything – even the smallest amounts. Bills, coffees, movie tickets . . . everything. This is very important because what you are doing is making a record, for yourself, of what you do with your money. If you ‘forget’, or try to hide your spending, you might as well stop doing this right now and think about your purpose. If your purpose is to change the way you live and move towards a more sustainable life, then even though this
process may be painful, it needs to be done.
At the end of each day, add up how much you’ve spent and how much of that could be called non-essential, and note those figures down. Knowing what you spend your money on and where you could save will help you when you come to the next two steps.
Your money-tracking list for a few days might look something like this:
You’ll have a fairly good idea of your spending habits at the end of a week, but keep tracking for a month to get a more accurate picture. You’ll find that many of your bills will be monthly and it is only in the context of accounting for everything you pay during that time that you’ll reveal the true nature of your expenses and spending.
Most of us know how much we earn in a week but few of us have a realistic and accurate idea of how much we spend, or what we spend it on.
At the end of each month, sit down with your partner and report on your expenses, or if you’re single, set aside some time to go over your month’s spending. Take the time to enter your figures in a spreadsheet or handwritten register so you can build up a long-term record of your spending. If you’re in a partnership, the end of each month is a good time to have a discussion, when you have your monthly figure in front of you, about upcoming expenses and how much money can be put aside for debt reduction or saving that month. Please remember this is not a time for arguing about money or making your partner feel guilty. Be kind to each other and expect a few stumbles in the first couple of months.
Down to Earth Page 4