1.  Pay yourself first, what this means is make sure you contribute to your savings plan first before you put money towards anything else!  The easiest and most efficient way to do this is to set up an automatic purchase plan.  You can set up weekly, bi-weekly monthly, etc. plans to automatically take a specified amount from your bank account and place it in your savings/investment account.   For most people if they don’t pay themselves first they find there is nothing left at the end of each pay cheque!

2.  Try driving your car a little longer!  I speak from personal experience when I say that new cars are expensive! The average new car costs around $28,000.  Two years ago I decided to sell my 1992 Honda Accord and buy a new one.  I bought my 92′ Accord for $6000 in 97′.  Between 1997 and 2007 I spent less than $2000 on repairs.  My new Honda accord costs me about $500 per month for 60 months with a $2000 down payment.  So over the course of five years i will have spent $32000 and that doesn’t include any repairs that are not covered under the warranty!  Over the 10 years that i owned my 92′ Honda Accord I spent approximately $8000 that’s $800 per year versus the current $$6400 per year that I am now spending on my 2008 Honda Accord.  That’s a savings of $5600 per year!  If you were to put that $5600 per year for four years in your retirement account and then left it there over 40 years at 6% it would grow to over $188,000.

3.  Evaluate your variable expenses.   Most people would be surprised to see how much money they waste on stuff!  After keeping track of my expenses for 6 months I decided that I needed to make some cutbacks.  One thing that I noticed in my expenses was that I was spending just over $5 per day at Starbucks.  That’s over $1825 per year on coffee!  I decided to start brewing my own which costs me about $8 per month for coffee beans.  That’s a yearly savings of  $1729 per year.  Once again at 6% for 40 years that’s over $267,583.  Now wouldn’t sacrificing that fancy coffee help you retire early?? Maybe you don’t spend $5 a day on coffee but everyone has something in their  budget that they could eliminate to save a little extra for their retirement.

So maybe  your not in love with all of these money saving ideas but even if you can put one of them to use you’ll be on your way to an early retirement!

The savings rate in America has been on a steady decline since the 80’s.  According to the Wall Street Journal household debt has finally decreased for the first time since 1952!  Over the past several years the savings rate has actually dipped below zero! Think about that for a minute, how do you ever expect to retire if your spending more that your making?  This is due to so many American’s racking up credit card debt thinking they didn’t need to save for their own retirement because they were busy watching the value of their homes skyrocketing! Well we all know what has happened recently to home prices.

I think we’ve all learned our lesson and its time to get down to saving for retirement and building up that nest egg.  The savings rate this year is expected to be approximately 3-5%, Goldman Sachs has even predicted it to be as high as 6-10%.

So what do you need to do to get started? The best way you can start saving is to set up an automatic savings plan.  Pre Authorized debits from your bank account into a savings account, brokerage account or retirement account.  Anything to get the money out of your everyday bank account!  Once these funds are separated you won’t be tempted to spend them, out of sight out of mind!

That doesn’t mean you can forget about them though!  You need to make a commitment to stay informed about what you are investing in and how your nest egg is growing.  Ignorance is not an excuse when it comes to your retirement, after all no one else is going to save for your retirement except you!  So get started, set up an automatic savings transfer today and you’ll be one step closer to your dream of early retirement.