My father-in-law retired comfortably at 63 thanks to 3 simple money rules he lives by

My father-in-law retired comfortably at 63 thanks to 3 simple money rules he lives by

October 5, 2020

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  • My father-in-law retired comfortably at 63 after raising four boys, and I've learned a lot from him about saving money.
  • He lives by a save 10%, give 10% rule — always budgeting in those items and allowing himself to spend flexibly in other categories without depriving himself.
  • He also pays cash whenever possible — like for used cars — and keeps his living costs down by doing projects himself and residing in an area with a low cost of living.
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In a world where being busy, keeping up with the Joneses, and early-retirement stories are always praised, it's important to realize that personal finance will often be a marathon for most and not a sprint. My father-in-law's retirement and savings habits are simple and basic, but his journey reminds me that I don't have to reinvent the wheel. 

Spending less than you earn and getting clear on your values never goes out of style. Here are a few valuable money lessons I've learned from my father-in-law, Fred, who retired at 63.

Save 10%, give 10%

My father-in-law's money philosophy has been pretty straightforward throughout the years: save at least 10% of his income and give 10% to the church. He saves even more now that he's retired and has no mortgage. To this day, he doesn't budget strictly or penny-pinch on things he values.

If he wants to order meals from a restaurant or take a trip, he does it. Still, this doesn't mean he's a frivolous spender. Most of the time when my husband and I visit, he always has a homemade meal on the stove ready to offer us.

When we go out as a family or my in-laws stop by our house and notice I haven't cooked yet (we're late eaters), Fred is often the first one to volunteer to treat us to dinner out on the town. It's clear to me that deprivation is not the goal, and no one is spending hours each day crunching numbers and cutting out coupons.

We don't see each other all the time, so there's value in sitting down together at a restaurant (or saving me from cooking that night and getting takeout) to enjoy a meal and good conversation and catching up.

His strategy reminds me of the 50/30/20 budget

My father-in-law's money philosophy reminds me of the 50/30/20 budget, which is a flexible way to manage your spending without assigning strict limits for each expense. 

Essentially, the budget works like this:

  • 50% of your income goes toward needs and fixed expenses.
  • 30% goes toward wants and flexible expenses.
  • 20% goes toward debt payoff and savings.

It's easy to just take a percentage of my income and save it each month then budget what's leftover. That way, I'm preparing for the future but also enjoying life now. If necessary, I can always opt to increase my savings percentage or even scale back each year. The 50/30/20 budget is pretty flexible, and you can even change it to 40/20/40 or whatever you want.

Pay with cash or make a big down payment 

This is another one of my father-in-law's key money rules that has always helped him keep nonessential costs low. 

We live in a society that often expects you to take out loans or swipe a credit card for what you need. Whether the debt is technically "'good debt" or "bad debt" doesn't really matter if it's eating up monthly cash flow. 

I'm in my late 20s and am getting more serious about saving for retirement. I realize that it's going to be hard to increase my savings rate and invest more when there's a ton of debt draining my bank account as well. 

My father-in-law often steers clear of things he can't buy in cash. If he absolutely can't pay cash, he'll make a sizable down payment. My in-laws always buy used cars in cash. They've saved hundreds per month by not having any car loans, and that's over the past 20-plus years.

They're also big on buying a lot of things used, including clothes. My father-in-law often says you buy clothes to wear them. Whether they're new or used, you have to wash them anyway, so there's really no difference after that point. But the money you save by shopping used can make a huge difference in freeing up more money to save.

More kids doesn't mean you can't retire when you're ready if you keep your living costs down

My in-laws have four boys, and I know firsthand that kids can be expensive. I've always wanted to adopt and have more kids someday — I have one son — but there's also the looming estimated price tag of spending $284,570 to raise a child through age 18.

Still, I believe parents can find ways to save and give their kids a good life. Housing is one of the biggest costs for most families, but my in-laws keep this expense at bay by residing in an area with a low cost of living. The housing prices in their small Midwestern town are 34% lower than the average in our state and 42% lower than the average home price in the US.

When my father-in-law realized space was tight in their three-bedroom home, he decided to build a second story on their existing home. He worked in construction at the time, so he knew how to do some of the work and asked friends for help with the things he wasn't as good at. He recalls spending about $15,000 on the addition from start to finish. This was back in the '90s, so I'm not sure what a home addition would have cost then, but today a second-floor addition would be anywhere from $120,000 to $150,000.

Even with projects he doesn't know how to do, he still finds ways to save money if possible. Last year, for example, my in-laws got new kitchen cabinets. While my father-in-law couldn't do the cabinet installation work on his own, he did help with the demo and removal of the existing cabinetry, which shaved money off the final bill.

These lessons teach me that saving doesn't have to be complicated or give me major FOMO in life. To save 30 or 40%, I need to be able to save 10% first, which is better than nothing.

Saving money today is all about balancing living a good life now and still being prepared for whatever the future brings.

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