Retirement might seem light-years away, but if you get to your golden years with insufficient funds, it’s guaranteed to be even further.
Saving enough over a 40-year career to maintain your lifestyle in retirement is challenging. But there’s a lot to be learned from the people who have managed to hit their savings goals well before that point, even if you haven’t been bitten by the early-retirement bug.
Grant Sabatier, a 30-something self-made millionaire who founded the finance blog Millennial Money, pointed out on his website that Americans on average spend 70% of their money on housing, transportation, and food (not including income taxes and Social Security).
In some parts of the country (hi, New York and the rest of the Northeast), the percentage spent on housing, transportation, and food can be even higher. That may leave you feeling defeated before you even start saving, but for Sabatier and others striving for early retirement, it’s an opportunity.
If you can spend less on those expenses, “then you can bank the difference,” Sabatier wrote on Millennial Money. He continued: “If you move to a smaller apartment, walk to work, and cook at home, you could realistically increase your savings rate to 25%+ or even higher.”
To do this, you may have to get creative. But there are some guidelines you can follow.
If you’re part of the one-third of Americans who overpay for housing, start by looking for a place that meets the standard measure of affordability: 30% or less of pretax income. But to really make progress on your savings goals, you’ll want to limit it as much as possible. If you can find a place that allows you to spend 25% or less of your after-tax income on housing, your savings account will thank you.
Even billionaire Warren Buffet keeps his housing costs low. Buffett lives in a modest house that’s worth .001% of his total wealth.
After housing, transportation is the next-biggest household expense, according to data from the US Bureau of Labor Statistics. It’s not surprising, since Americans borrowed more money last year to pay for their cars than to pay for college.
Having a reliable car is important, but you don’t have to commit to paying $500 a month for the next six years to get one. When shopping for your next car, make sure you can either pay cash up front or pay off the auto loan in three to four years at most.
As Business Insider’s Alex Morrell reported, eating out accounts for 43% of the annual food expenditures for families on average — an obvious area to save some cash.
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One area that may be easier to target, depending on your social life, is cutting back on “miscellaneous” grocery expenses such as premade meals and snacks (Hot Pockets and Lean Cuisines, Morrell writes, as well as Doritos). You might also consider skipping extras like condiments and vitamins, since most supplements are a waste of money anyway.
For Sabatier, who was able to amass over a million dollars in five years, cutting back in these three areas has been more than worth it.
“At the end of the day it comes down to a personal choice, but I was happy moving to a smaller apartment, moving closer to my office, and eating out less, to bank the difference,” he wrote. “And I definitely was able to bank the difference — saving at least an additional $13,000 per year by cutting back.”
This story originally appeared on Business Insider.