A home bigger than your needs

Living in a modest home is also among the most common sacrifices frugal people make to build their nest egg, according to the Principal survey.

“The easiest way to lower your expenses and save more for retirement is to buy a cheaper house,” recommends David Ruedi, financial advisor and vice president at Ruedi Wealth Management.

You might have the money to purchase a big home and feel extremely satisfied by all the space you have, but the satisfaction will not last forever. Especially when you’ll have to spend a big part of your income on mortgage payments. Contrary to what many people might think, “a frugal home purchase will enhance your current happiness because you’ll have the peace of mind that comes from knowing you’re in good financial shape,” says Ruedi.

Instead of making materialistic purchases that you will regret later, consider all the cash flow you’ll have for other important things such as your retirement savings.