hand with a calculator. money saving concept.

Saving Money by Choice, Not by Chance

A question that I answered in a previous post brought a small avalanche of mail, mostly from readers who were aghast that I would suggest they save such a significant portion of their paychecks for retirement. It was money they insisted they could not afford to save.

hand with a calculator. money saving concept.

I can only imagine that for a person who saves nothing, suggesting they should be saving thousands every year can be shocking. Or perceived impossible. Here is one of those messages:

Dear Mary: I am a 34-year old college grad. My school debt is approximately $46,000. My car loan is $8,500. I have a chronic medical condition that costs me thousands each year.

I was reading an article that you wrote where you told a reader that she needed to save the maximum allowed in her 401(k), which I believe was something like $17,500 a year, plus save an additional 10% of her net income in her emergency fund.

I am barely making it right now, though I work full-time as a teacher and make approximately $65,000 a year. I would love to know what you would suggest I do to start being able to save that much. Heather

Dear Heather: I recall that article. Reader B.H., as she identified herself, is a recently single mother with two college-aged kids, barely surviving because she is putting the financial support of her two adult children ahead of her own financial care. She’s in a difficult position.

I recommended that she immediately shift to taking care of her own financial future now that her children are old enough to be on their own. I went on to point out all of the ways she needs to be crash-saving for her retirement because, at this point in her life, she is all she can count on. She must begin to take care of her own financial future.

I responded to B.H., “You need to make sure that you are contributing the maximum each year* to your employer’s 401(k) or 403(b) retirement plan. Once you reach age 50, you can increase that amount by another amount per year as an allowed “catch-up” provision and you should.”

Of course, she is not required to contribute any amount to her employer’s retirement plan, and she can contribute any amount up to the maximum allowed each year. At this point in her life, however, it is important that she push hard to reach the maximum.

You may believe that you cannot save because your debts are high. Or you may believe that despite the fact that you make a decent income, you just do not make enough money to save anything at all. Wrong. How much you save has little to do with your income. It has to do with the choices that you make.

Even with your large student debt and car loan, at $65,000 per year,  you have—or should have—some amount of discretionary income. It all comes down to what you choose to do with that money.

You can choose to spend it now or you can choose to save it. Even if all you can save is 5%, do it. Start now. Then start looking for every way you can stop spending so you have more money to save. Track your spending. Know where every penny goes.

The easiest and fastest way to raise money for savings is to cut expenses. I know times are tough, the price of everything seems to be going up. Still, I’m certain there are myriad ways you can reduce your expenses even further.

Look at every expense. Eliminate all you can—like cable TV, restaurant meals, drive-thru coffee—then cut back everywhere else. Examine every expense and ask yourself, “How can I reduce this, even if only by a small amount?” (And on that happy day when you make your last car payment and again when you send in that last payment on that big student debt, start paying those monthly amounts to yourself and your future).

As a school teacher, I assume you have at least a couple of months off in the summer, as well as extended holidays at Christmas and Spring break. Am I right? Instead of seeing those days off as free time to rest and vacation, look at them as golden opportunities to pick up side jobs. One idea that comes to mind would be to freelance as a tutor. It is feasible that if you were diligent to save all of that additional income from side jobs, right there you would have enough to reach your annual 10% savings goal.

I don’t know your situation in detail but I can promise you this: The sooner you start, the more time your dollars will have to grow. The choice is yours.

For my readers who only wish they’d started when they were 34 years old, I will tell them they cannot change the past, but the future is a blank slate.

Start today. Make the tough choices, the difficult decisions. Embrace frugality, adopt simplicity. Be willing to make sacrifices. And never forget: It’s only too late if you don’t start now.


*The maximum allowed for 401(k) and 403(k) annual contributions for 2021 is $19,500. The limit on annual contributions to an individual IRA cannot exceed $6,000. The additional catch-up contribution limit for individuals aged 50 and over remains at an additional $1,000, or $7,000 total.




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9 replies
  1. peggy says:

    Dear Mary, I read w/interest your column on parents saving for retirement. it is unfortunate that folks who cannot afford to pay for college, sign loans for education. i wonder if these folks who enable their offspring think they will b repaid when it comes time for them to retire. this is a scary trend. people need to let their children grow up and b responsible for themselves. i cannot guess what they r thinking. my nephew has a straight A report, and is going to enter a community college, because HE does not want to put himself in debt. my brother and sister in law have given him the gift of responsibility for himself.

  2. MoreFreedom says:

    I also urge people to save for their retirement. I participated in my employer’s 401k match (matching up to 6% of my salary), and also stock purchase program (I got a 15% discount for up to 5% of salary applied to such purchases). Thus, I saved 21% of my income. I worked for almost 40 years, and that savings has grown to about as much as the company paid me, in total, over those years. And FWIW, my employer’s stock underperformed. So I’ve got enough savings for decades of retirement. That 401k match is a no-brainer IMHO, it’s essentially a 6% raise if you save the money.

    Mary’s advice was also helpful in avoiding unnecessary expense. Work, and being a cheapskate, are all about creating value for ourselves, our family and customers (at least to me – thanks Mary) which I see as very positive.

  3. Suzanne Patterson says:

    My parents spent every cent they ever earned and saved nothing for retirement. My father passed away 6 years ago, and the last bit of money my mother had was spent on his funeral. It wasn’t enough so my siblings and I paid what she couldn’t. And then each of us paid $2000 the day after the funeral to replace the HVAC system in her house. The only money she has coming in is a small social security benefit and reverse mortgage payment. It’s not enough to pay her living expenses, and she relies on her children to pay what she can’t.
    My husband and I are retired and our children will never have to support us because we DID save and invest for our retirement. It wasn’t easy. We went without things that other families enjoyed, but we’re glad that we did. We are financially comfortable, largely debt-free, and can enjoy our free time doing things we enjoy. Our children can save and invest for their futures because they don’t have to support us. So to those who think it’s impossible to save for the future, ask yourself how you’ll feel if you’re unable to meet your living expenses when you’re too old to work, or if you must rely on your children to support you. Ask yourself if it’s worth making sacrifices in the present to give yourself and your children a secure financial future.

  4. Nancy says:

    I told my children when they started their first career jobs – contribute at least the amount the company matches in the 401k for a 100% gain. If you start with your first paycheck, you will adjust your spending to what you have remaining and will never miss it. As you watch it grow, you will be encouraged to contribute more with each pay increase.

  5. cheryl says:

    This is for the Teacher that thinks they can not save. Most employers have some sort of company match for a 401k, ours is 6%, start with 1% and they match 1%, let that go for about 3 months, see how you fare, then sneak it up on yourself and in 6 months do another 1% until you get to the Company match maximum, Utilize your Library in town to borrow books, movies, music, and now EVEN WIFI Hotspots, (in our city), Starbucks is ubiquitous, so are some wifi cafes, use them for all non private, non financial transactions, the schools usually have their own enclosed internet, you can do your lesson plans on that one. You do not mention if you are married or with children, but if single, check out local food pantry, ours has a program whereby you volunteer hours to help sort and bag, and you can earn free groceries, (if your health permits). You can also reach out to the manufacturers of your medications to see if they may have a program that you can get your medicine costs reduced. It is not easy, but look it as a fierce competition that you can conquer and pretend that you are encouraging a student to go forth and succeed!!! YOU CAN DO THIS!!! After all those exams to become a teacher are no joke. IF YOU CAN PASS THOSE, YOU CAN DO THIS!! Most of the time, it comes down to getting out of your own way!!! Sending you GOOD ENERGY and BIG HUGS!!!

  6. Dot says:

    I wish my parents would have taught and explained retirement or even savings – I would be sitting pretty . I can’t change the past but I can my present and future .
    Keep teaching ! I have learned a lot !!!

  7. Susan Sharp says:

    I started participating in my employer offered retirement account the moment I became eligible. Initially I contributed a small amount but with every raise I got I put that additional money in my retirement account. It’s healthy now and I am planning on retiring in a few months. I’ll be fine. It doesn’t have to be a huge amount but I always encourage the younger co workers to save everything they can for retirement. I will have to give up nothing to enjoy my retirement.

    • Maria says:

      I also encourage all young people to save for their retirement. Once they get to be a certain age, most companies will not want them anymore.


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