I was chatting with my wife earlier today and I mentioned that I was a proud of a something relatively minor in my retirement so far: I don’t obsess about our spending. I also don’t ignore it either. I keep an eye on our spending but I don’t sit down every month examine every dollar in detail. Instead I keep track of the big picture – how much we spend over a year and not so much about a given month.
My wife’s reply was to the point “You better not care about every single dollar you spend or what was the point of retiring in the first place?”
She is right of course. If you have to worry about every dime you spend in retirement it won’t be a fun life regardless of having all the extra free time.
Which brings me to the point of today’s post that every retirement budget needs something: slack or buffer. Or excess spending dollars or what ever you want to call the concept. The point is you NEVER want to retire on a shoestring budget with nothing extra in it.
I know when you are saving for retirement there is a temptation to reduce spending as far as it will go to get to your early retirement sooner. Which honestly that isn’t a bad short term exercise so you know what the shoestring number is but often a short term dip in spending can’t be sustainable in the long run. Why? People often will push off replacement of items and make due. Which honestly can work just fine in the short run. It just can easily start to fall apart over a long period of time.
For example, I bought a new weed trimmer this morning to finally replace the one I originally bought with our first house over 12 years ago. Why? Well the line feeder started acting up during the end of last season. So this year I just made do the first few times I used it but then the plastic guard with the line cutter broke off. Now it was just a pain to use the old weed trimmer and while it sort of did the job but only with a lot of hassle and screwing around with it. So avoiding replacing it would have just ended up costing me a lot of time and frustration in the long run. Rather than do that I looked for a new one and found a cordless battery powered weed trimmer on sale and bought it this morning. I already love not having to drag out my extra long extension cord to trim the lawn after cutting it (my previous one was a corded model).
So for a cost of less than $100 I managed to replace my old weed trimmer and also do a small upgrade by going cordless which makes me much happier since I can accomplish the job faster than using my old one.
In the end, I wasn’t afraid to spend the money and I ended up with something better for me in the long run. That is because our budget includes some slack for the things that do break down over time and need to be replaced. You can’t predict where these will occur so you best to just add in a buffer or slack to your budget to account for it.
So how do you deal with the eventually replacement of things in your home? Do you keep a set dollar amount or percentage of budget for your buffer or just use your actual yearly spending with those one off items in it?