How Much Should We Save in a Pre-Tax Retirement Plan – Budgeting

First, nobody gets to retirement and complains: “Whoa, I have too much money! How am I going to spend it all?” You can never save too much money, yet many people save less than they need.  

Saving money for retirement is not a matter of how much, but how long you have been saving. Investing is a recipe with only three ingredients:

Money + Time + Knowledge

The more time you have, the less money you need. The less time you have, the more money you will need to reach the desired outcome. If you do not apply well-informed, judicious decision-making along the way, you may also fall short of your desired outcome.


Everyone needs to have a spending plan. You can call it a budget if you like. The fact is you all bring home X number of dollars each month, and every month bills arrive demanding a piece of that ever so finite paycheck.  Your goal is to make sure that every bill/installment gets paid in full on time.  Use whatever method works best for you to develop this discipline.

I admit to being hopelessly old-fashion. I do pay some bills online, but I also write checks. Whether I write a check or send an auto-draft through my credit union accounts, I write every transaction in my checkbook registers, and I balance them each month. Payment histories are a treasure trove for planners.  

One client shared her experience of budgeting her modest, monthly paycheck after a divorce.  Back then (the early 1970’s) divorce usually resulted in a woman losing her credit even if she had a steady job and had always paid her bills on time. My client had never even carried a balance on a credit card. Yet having a credit card had given her comfort that she could spread out a payment if she really needed to do so. We’re all supposed to live within our means, but seldom is the phrase so stark as when there is absolutely no credit cushion.

The couple had not been married long and did not have children. My client was not granted alimony as the ex-husband did not have the means. She was paid on the last day of every month. She deposited her check at her credit union, then immediately wrote checks for the rent, the installment payment on her car, her auto and renter’s insurance, and to each of her utilities, which she had converted to equalized payment plans. Then, she paper clipped these checks to pages in a desk calendar which corresponded to the date she expected each bill. Whatever remained is what she had for food, clothing, transportation expenses, and entertainment.

Eventually, she re-established credit under her own name. Her discipline earned her a fantastic credit score and she had no trouble getting a mortgage when she decided to buy her apartment when it converted to a condominium.


When my husband and I married, he was in graduate school and I was working my first “career” job out of college. It was the kind of job where one learned a great deal but was paid very little. Our financial resources were so meager we had to pool our money in order to maintain the minimum balance in our checking and savings accounts at the local credit union. We quickly discovered that withdrawing “walking around” cash from the checking account did not work well. Inevitably, one of us would withdraw $40 from the checking account when we did not have the check registered with us and forget to record it. So, we developed a rule: only take “walking around money” from the savings account.  

Our credit union made it possible for us to establish a money market account—that paid a slightly higher interest rate—with as little as $200. We put our sacrosanct savings in the money market account and used the passbook savings account as a petty cash fund. Each month we would contribute enough money to the petty cash fund to get it to $500. If one of us withdrew from petty cash, we had to replace what we withdrew, but only when we had the check register in front of us.

Eventually, we both had regular paychecks, so the need to pool money to maintain the minimum balance was not an issue.  But that was not the end of—shall we say—issues.

If we stipulate that opposites attract, chances are that you and your spouse have very different views on how to maintain a checkbook.  You may be a “balance-to-the-penny-every-month” sort of person, and your spouse is more of a “as-long-as-the-balance-is-a-positive-number-I-don’t-have-time-to-find-every-last-penny” kind of person.  I confess to being a “balance-to-the-penny” kind of girl. Both views can work, but only if each maintains his/her own checkbook.

Both accounts should be joint accounts and they can both be at the same bank or credit union, but for sanity, separation would keep the peace.  If we assume both members of the couple work, each person should have his/her paycheck deposited to his/her own checking account and each member of the couple needs to assume responsibility for family bills commensurate with that paycheck.

Family bills are those that contribute to the maintenance of the family:  mortgage/rent, groceries, water, electricity, natural gas, telecommunication expenses, homeowner’s and auto insurance, gasoline/transportation expenses, work and school clothes and other necessary supplies. 

All of the above expenses need to be reviewed periodically, but two have ballooned in recent years:  Telecommunication and Transportation (more on these below in the Evaluate section below). Thanks to technological advances, cars are now the safest they have ever been, but they are also more expensive. If one member of the couple has a specialized vehicle needed for the type of work they do, such as a pick-up truck for landscaping, that vehicle is not part of the family budget. That vehicle should go on the business budget.

The choices in home technology have mushroomed in recent years. We now have more than just a land line into our homes and an antenna on the roof to pick up the signal of NBC, ABC and CBS. We have cell phones, combination printer, scanner and fax machines, cable television, the internet and satellite TV. Every family needs to make the right choice of which technology will work best in their location and for their family’s limited cash resources.  Once well-informed choices are made, this line item needs to be accepted by one of the two checking account holders.  You have successfully divided and conquered. (See Evaluate Your Choices for how to pick the right products and services for your family.)


I like the word “evaluate,” because it contains the word value, which is what we seek. The best value is not always the least expensive alternative. Consider household tools:  The cheapest shovel at the hardware store may seem like a good value, but not if it is so poorly made that the metal buckles when driven into the soil, or the shaft cracks under the pressure to lift it. Think of what is needed to accomplish the task, and then purchase tools or services equal to the task.  

Don’t forget the value of your time. Time is the one thing that is irreplaceable. Would you rather spend your weekend cleaning your gutters on ladders that give you the whim-whams, or visiting with your grandchild?  Hire a handyman and spend precious time with your grandchild. Or, if your grandchild is nearby and a nimble teenager, let them get on the ladder and clean the gutters. Pay them for the service (in money and/or home-made cookies) and everyone wins.

Some choices are between want and need. We need reliable transportation. We want a cool-looking car.  Personally, I have only once purchased a brand-new vehicle. We nursed that car through ten years of use before an accident totaled it. Once you drive your car off the lot, no one is going to know if your car was purchased new or used. Consider the family budget and buy accordingly.

When it comes to telecommunication services, consider the following:

1.)  Do you need both a landline and cell phones?

2.)  Do you need cable internet and television, AND seven different streaming subscriptions? Would a cable for internet alone and perhaps a subscription to one or two streaming services be enough to meet your entertainment needs? You do not need cable to pick up broadcast stations if you have a set top antenna.

3.)  Would it save time and your sanity/marriage to hire a telecommunications expert to set up your telecommunication suite? That might be the best $150.00 – $200 you’ve ever spent.

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