There are four key stages to planning for your retirement. Firstly, map out what you want your life to look like (read more). Secondly, take control of your money. Thirdly, review your investments (including your superannuation) and make sure they are suitable for what you need (read more). Finally, implement it – automate savings plans, change super, set up investments (read more).
This article focusses on the one area that many people struggle with. Spending. This is an important element to taking control of your money.
Take control of your money
Planning for a financially free retirement

The reality is that every thousand dollars you spend now will be two thousand dollars you won’t have in ten years’ time; or four thousand dollars you won’t have in twenty years’ time; or eight thousand dollars in thirty years.

If you want to have a retirement where you are financially free, you need to save (and invest) before you get there. Saving is one of those things that becomes harder to do the older you get, both in terms of the amount you need to save and the change in mindset.

To show you how it is hard to catch-up, let’s compare three ways to have $1 million (in today’s dollars) saved by the time you are 60. Keep in mind all scenarios include saving and investing to get annual returns equivalent to 9 percent per year.

30 years old – you need to save around $10,000 per year. Saving for something that may happen when you are 60 can seem like a waste of money. This is money that you could be using to go out, buy the latest iPhone, have fun and travel the world.

40 years old – you need to save around $23,000 per year. You have a large mortgage, are busy raising a family and may be paying private school fees. Finding a spare $23,000 a year can often seem like a bridge too far.

50 years old – you need to save nearly $70,000 per year. In theory, the kids are getting ready to leave home and your mortgage is under control. In reality though, your kids may be going to university or you may be looking to upgrade or renovate the family home.

Regardless of what you have done in the past, the best time to start saving is now.

Make sure you can save

The first thing you need to do is make sure you are able to save. That is, you don’t spend everything (or more than) you earn. There are two ways to review your expenditure:

1 Manually

  • Get your bank statements that itemise all of your expenditure.
  • Go through each line item and categorise it. It can be as detailed or broad as you like, whatever works for you.

2 Automatically

  • Create an account on one of the software providers like Frollo, Pocketbook or Money Brilliant.
  • Have the software categorise your expenditure, noting you will probably need to review the way they do it.
Be clear about your values (and goals before and after your retire)

Before you analyse your spending, you should be really clear about your values and goals. Use this as a lens through which you can review it.

Just as Marie Kondo famously says “does this item bring joy to your life” when helping people declutter their house, you should do the same with your spending. That is, ask yourself “does spending on this item/area bring joy to my life.” If not, stop doing it.

You will be surprised how much little things like “popping in to get some milk” ends up costing you. If each of these times it costs $50 and you do it twice a week, after 30 years this could cost you half a million dollars.

Note that this exercise isn’t about cutting out all non-essential spending from your life. The purpose of it is to put you in control of your money.

If you would like help to get in control of your money, we have a 6 month program that will deliver what you want. To discuss, book a chat with Phil via the link below, or contact us on 0417034252 or by email at

About the Author
Phil Harvey is an independent financial adviser. In 2017 Phil set up his company Construct Wealth to help clients best manage their finances so they focus on what is important to them. He is a founding member of the Profession of Independent Financial Advisers and a tax financial adviser, registered with the Tax Practitioners Board.

General Advice Warning
This advice contains general information. It may not be suitable to you because it does not consider your personal circumstances. Phil Harvey and Construct Wealth are authorised representatives of Independent Financial Advisers Australia (AFSL 464629)

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