8 Tips for Saving Big and Retiring Earlier

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A key aspect of financial independence and retiring early is controlling your expenses. While developing your career to earn more gives you powerful leverage over the retirement equation, saving more is a simple strategy that you can apply every day.

Living cheaply is easy once you get in the habit. But it does require some energy and attention to detail. It’s also important to stay motivated by keeping your end goals in mind.

To help you with some of the details, here are my favorite tips and techniques for reducing or controlling your expenses:

1. Pace Yourself

Learn not to spend impulsively. Keep your own personal expense thresholds in mind. For purchases above those amounts, put them on a list, and study them first. Read reviews, ask questions, consider alternatives. Don’t rush.

Use wish lists to delay and defuse the need for instant gratification. I have lots of wish lists on that I use to queue up books, music, and other things that I might purchase some day. Having them on my wish list ensures I won’t forget about them. I even get some "ownership" pleasure from keeping them on my list, plus some benefit from reading reviews. And I often find, as time goes on, that I don’t really miss things that looked appealing at first. In other cases, the right time comes, and I can add one or more of those items to an existing order, and save on shipping costs.

See if you can limit major purchases to certain seasons, and defer spending otherwise. For example, the end of the summer, and the New Year, can be natural times to evaluate and spend, if necessary. This saves you time having to think and analyze during other periods in the year. And it may let you take advantage of sales and get better deals.

But allow yourself to splurge in certain times or areas. Maybe it’s a special day of the week, or after a hard workout, or anything under $5. Just be mindful whether your splurges are becoming obsessions that threaten your financial welfare: Are they happening more than once or twice a week? Are they constituting more than a few percent of your monthly spending? Then, those aren’t really splurges. Otherwise, don’t fret about them.

2. Minimize Stuff

Beware complex or specialized devices whose purpose is to "save time." I’ve found that the overhead to regularly using most household labor-saving devices is usually much higher than expected. Once the novelty wears off, many tools and appliances gather dust in a corner somewhere. (As I write this, we have a box on the porch of unused kitchen gadgets, headed to the next yard sale.)

Go slow when upgrading. More often than not, newer "improved" versions of things, just aren’t. Sometimes they are more powerful, or easier to use. But much of the time they offer the same core functionality, along with more complexity, more fragility, cheaper parts, and new less-important features that detract from the main function. Moral: defer buying the next generation, until the current generation actually breaks.

Most modern tools and appliances with moving parts have their own maintenance schedules: subsystems to be disassembled and cleaned, oil to be changed, filters to be replaced, and so on. Is your chore list really for you, or is it full of tasks created by the things you’ve accumulated? When something you own creates chores on its own, get rid of it!

3. Cut Recurring Expenses

Be especially watchful of recurring charges for utilities, phone service, insurance, subscriptions and memberships. Companies have little incentive to go out of their way to help you minimize your bills. Their policies and procedures are necessarily oriented to persuading you to tack on additional charges to your monthly total.

And these add up over time. Don’t think of them as "only an extra $50/month." Think of them as the 300 x $50 = $15,000 that you must save to produce that income in retirement!

Identify and focus on reducing your top few expense categories. For most people, these four will loom large: housing, food, transportation, health care. Brainstorm ways you can significantly reduce spending in these areas, and you will reap huge dividends in your progress toward financial independence:

4. Optimize Housing

For starters, ask whether you can stay in your existing home instead of upgrading. And, if it’s more than you need, downsize as soon as practical. Remember that paying mortgage interest on unused or unneeded space is a steady drain on your financial resources. Investigate smaller homes or condos, mobile lifestyles, RVs, and house-swapping.

In general, pay off your mortgage as soon as possible. With investment yields so low, and returns so unpredictable, using extra income to pay down a high-rate mortgage loan can be an excellent investment. In some cases it may make sense to keep paying a low-rate mortgage. But don’t underestimate the peace of mind and confidence that come from living totally debt free.

Be very careful about home improvement projects. It’s possible to spend vast sums of money on your home without measurably improving your quality of life. And the old rules about getting it back when you sell, have changed, along with the meltdown in housing. The return on a remodeling investment has eroded from about 87% in 2005 to about 58% in 2012. If your home is already safe and comfortable, don’t borrow to improve it, even against its own equity.

Don’t spend on anything that doesn’t give you an immediate benefit. Trying to create the perfect home is a futile battle. All material things are imperfect and wear out. We’ve seen expensive carpets get trashed by teenagers and pets, high-end stainless steel appliances get scratched and discolored, and beautiful granite countertops destroy a dozen articles of clothing by abrasion.

5. Fine-tune Your Food

Food is the most frequent major expense, and it is intimately tied up with health. Awareness pays dividends.

Simplify meals, buy in bulk, find recipes online for what’s on sale, eat lower on the food chain. Monitor your pantry and fridge to control waste. See what’s nearing expiration and consume it before it goes bad. Cook at home more. Is there an expensive prepared food that you just love? Develop your own recipe. It will likely be cheaper, and healthier for you. We’ve done that for energy bars and fancy tea drinks with great success.

If you find you are spending a lot on groceries, break it down. Analyze a few grocery bills and find out where the money is going. In our case we realized we were spending too much on expensive juice drinks, and we were letting fresh produce go to waste. By concentrating on those, and other areas, we were able to reduce our grocery bill by about 20% over a year’s time!

Keep a petty cash purse for dining out or similar activities. If you want to forego cash, you can use one or more debit/money cards to control spending in certain budget categories. Replenish monthly with your budgeted amount. When the cash or card runs out, you’re done in that category for the month.

6. Tune Up Transportation

It’s liberating to disconnect your self-image from your vehicle. Drive modest vehicles, purchased used if possible, instead of the latest hot models. Smaller vehicles cost less up front, consume less gas, are easier to drive and park, and can still earn high safety ratings. Buying used means you miss the punishing first year of depreciation.

Maintain vehicles well: do it yourself when possible, else use a local mechanic instead of the dealer. And drive those vehicles longer. Most modern vehicles can give reliable service well after turning 100,000 miles, if properly cared for. When something major goes wrong, carefully evaluate the repair/replacement decision. It often makes economic sense to do major repairs, even on older vehicles, especially if you can get a warranty on the work.

Downsize your vehicle count. Do without that extra vehicle. Share, car pool, or use public transportation. Bike and scooter where practical. When I retired, I gave up having my "own" car and now share one with my wife. I expected that to be hard, emotionally and practically. It wasn’t. It’s no big deal to schedule my trips around hers. And it’s great having one less vehicle to maintain, insure, and manage.

7. Focus on Health

Health care may the toughest cost to control. In today’s world, individuals have only a little leverage against the health care establishment. But you can start by taking good care of yourself first, through better diet and exercise. Your health is both a quality of life and a financial issue. The potential cost savings of a healthy lifestyle, especially in your later years, are enormous. If you can’t get motivated other ways, think of all the money you’ll save being healthy! Eat moderately, eat well, and exercise daily. Physical and mental health are the foundation for enjoying the rest of life: other goals, including financial goals, don’t make much sense without it.

A simple path to better health for you, and the world, is to cultivate free, green fun. Anything that involves self-propelled activity on public lands, or in public facilities, is an excellent candidate. (Avoid ongoing membership fees at all costs.) Start by walking, hiking, or running. Move on to swimming or road biking. Throw in some team sports if that’s your thing. Or advance to paddling, climbing, or mountain biking, or something even more extreme, if you’re able and willing. Some of these activities require modest expenses up front, but then cost very little for a lifetime of enjoyment. They’ll keep you in good health, minimize impact on the planet, and are hugely fun and exciting. What’s not to like?

8. Leverage Generosity

Keep an annual budget in mind for your charitable contributions. Then keep track of individual contributions to ensure you are prioritizing the organizations you value most. It’s also helpful to keep track of what you gave in previous years, for comparison.

Charities, like other direct mail operations, pelt you with numerous solicitations throughout the year. If you don’t keep track of your giving, you may find that your actions don’t match your priorities. I keep a checklist of my currently-designated charities next to our junk mail recycling bin. If I get a solicitation from an organization not on the list, or one on the list that I’ve already donated to for the year, it goes into recycling unopened.

There seems to be a higher law of money: generosity leads to wealth. I know that one of the happiest and most prosperous years of my life was also one when I was most generous. And I’m not sure which was the cause and which was the effect. They seem to be interrelated. Generously and wisely allocating resources without desperately hanging on to each dollar, is a mindset that also leads to recognizing and capitalizing on opportunities for personal prosperity. And it just feels good.


  1. Darrow,

    Very good advice. I particularly like the "minimize stuff" category. Americans in general just
    have too much stuff. My rule : garages are for comfortably parking vehicles inside.
    If you can't, its time to do some massive downsizing of stuff.
    Not only is this good for your vehicles, it saves time in the winter avoiding scraping of ice
    and warming up the car. Less washing and waxing too.
    We have been getting rid of extra stuff all year. It's actually quite liberating and therapeutic.
    If its over a year old and you have not used it, and its not a family heirloom, out it goes!



  2. Hi Darrow,

    I've thought about this too. As I'm still employed and saving in 401k, etc., part of our controlling expenses is (to some extent) living paycheck to paycheck – with autiomatic savings deducted from paychecks before I see the cash. I've wondered about how people might implement this in retirement, as I suspect that many people will have trouble pacing themselves if they simply take their SWR out of savings at, say, the start of each year, and wait for dividends, social security, and so forth to dribble in. Might you have thoughts on this?



  3. rubin pham says

    your advices are truly practical.
    thanks for sharing with those of us who want to get out of the rat race.

  4. Darrow Kirkpatrick says

    Excellent Steve, thanks for the comment! I share your one-year rule, and the penchant for bare garages….

  5. Darrow Kirkpatrick says

    Hi Barry, that's an interesting question, which might come down to personality. I feel more comfortable having several years cash set aside in advance, so I'm not worried about market gyrations, then using my tracking tools (Quicken and spreadsheets) to watch my cash flow. Others might do better, as you say, with some sort of automated mechanism taking a systematic withdrawal out on a regular basis, which they could spend in total. But that begs the question of where the withdrawal is coming from: some investment management is required. If somebody really wanted hands-off automated pacing, then a fixed annuity could be a good choice.

  6. Darrow Kirkpatrick says

    rubin: Thanks, I appreciate that!

  7. Jenna, Adaptu Community Manager says

    Great advice! Loving how you spread the message of early retirement tips (and how simple they really are).

  8. This was a fantastic list. Thanks, Darrow!

    Food is by far the largest expense between my fiance and I. We just started sharing expenses a few months ago and it seems like our budget exploded in this category because we have different ideas of what the pantry should be stocked with. He thinks retiring early is a farfetched daydream but I'm hooping we can align together on this goal. Thanks for the tips!

  9. Darrow Kirkpatrick says

    Appreciate that Jenna, thanks for dropping by!

  10. Darrow Kirkpatrick says

    Hi G.B. Thanks for that comment. Yes, truth told, we've had some pantry conflicts in my household as well. But we've compromised and organized and managed to shave quite a bit off our food budget. Best wishes for your goals!

  11. So glad to have found your blog through MMM! I'm just starting out but it looks like you have lots of great advice to offer.

  12. Darrow Kirkpatrick says

    Thanks Chase, glad to have you here!

  13. Mr. Sharma says

    As Chase above, glad to have found your site through MMM!

  14. Hi Darrow….

    Like some others above I followed you here from your guest gig on MMM. I've been poking around a bit and clearly have found a kindred spirit. Except for the rock climbing. Fear of heights.

    Of you list here, #3 was of particular interest. In recent years companies have become especially skilled in creating these reoccurring fees, getting us to buy in, setting them on autopilot that takes serious effort to disengage and then ratcheting them up. Very insidious.

  15. Darrow Kirkpatrick says

    Thanks for dropping by Jim! I think we also share a love for the Granite State. And you're so right about those insidious recurring expenses. They're hard to shed — better not to get started in the first place, if possible!

  16. Such great info Darrow, thanks! Also, it's not easy thinking this way in a world that's so conspicuous consumption/Chase the Jones' oriented. Although that seems to be changing now. Still picking a support group that's in alignment is a great help as you build discipline here.

    best all!

  17. Darrow Kirkpatrick says

    Thanks CK! So true about the support group. See my Resources page for other blogs in this space. We are not alone!

  18. All of these are so true. It is just better when you hear it from an someone who did it successfully. You retired early and you have time to think and nicely writing down these things.

    Thank you.


  19. Darrow Kirkpatrick says

    Thank you Rox. Experience does count for something.