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Burst Saving – How to Catch Up on Your Retirement Savings

Burst Saving – How to Catch Up on Your Retirement Savings

I was reading an article about how people save for retirement, and it struck a few chords with me.  The first thing it said is that most people struggle most of their lifes trying to save money for retirement.

I’d have to agree with this.  After all, you can’t save money while you’re still in school.  And schooling takes up nearly 20-25% of most people’s lives.  After that, if you went to college then you probably have years of student loans to pay off.  If you didn’t go to college, chances are the job you find isn’t going to make you wealthy right away either.  What I’m really trying to say here is that you don’t even get a chance to start saving until you are in your mid twenties.  Then, there’s the buying a house, having kids, and saving for your kids future.  Not to mention that the cost of raising a kid is now approaching several hundred thousand dollars over their lifespan.  And then, just when you start to get ahead, there will always be something to set you back.  Perhaps it’s a bad economy, a job loss, your children’s tuition, a large medical bill.  Whatever the case, saving money for retirement is difficult.

how to burst saveEnter the concept of burst saving.  Burst saving is really a concept of how to save money quickly when you can.  Most people that use burst saving are only able to do it for a short period of time.  That is why it’s called ‘burst’.  For example, if there is a time when both you and your spouse are working and you have held your costs down, it is possible that you can save a lot of money each month.  Or maybe, you start getting bonuses at work or some larger raises, but don’t raise your spending.  You can start to save a lot more money.  Burst saving doesn’t last forever, but by really taking advantage of the times that you can save money without raising your expenses, you can really juice up your retirement savings.

For most people, burst savings comes later in life.  After their kids are done with college, their house is paid off, their expenses are low, and their income is at its peak.  However, with some proper planning, you can get your burst in early.  For example, when I graduated from college, I started making pretty good money after about four years.  The first thing I did in the first two years was to buy a car and pay for the entire car and all of my student loans within two years.  That meant I had the next eight years before I had kids to burst save.  I put all of my bonuses and a lot of my paychecks into savings and invested them all.  It worked great for me, and if I hadn’t made some poor investments and gotten wiped out by the dotcom bubble, I would be set today.  Unfortunately, I’m not in the position to boost my savings while being a blog writer.  Google’s immense de-emphasis of my several blogs has seen to that.  However, I am on the lookout for a real job that I can use to pay the bills.  Then, my blogging business can be my ‘burst’.

So what do you think?  Have you been able to burst save?  Please share your thoughts?

{ 12 comments… add one }
  • Hausdorff August 29, 2012, 12:42 pm

    Right after I finished grad school I got a temporary job that paid pretty well, at least compared to my old graduate student income. I didn’t change my lifestyle at put away about half of my paycheck every month. That job lasted a year so I had a pretty sizable amount built up. Unfortunately since then I have not been as lucky on the job market, but since I made it a point to burst save during that year I haven’t had to go into debt since then just to get by.

  • professionaltightwad August 29, 2012, 4:56 pm

    You know, this is a wonderful concept and not just for retirement savings. It’s easy to get caught up with saying you can’t save and then when you do get extra, your brain is still set on being unable to do so. Instead of taking advantage of bursts, as you say, most of us don’t catch on until that period has gone. Thank you for putting that idea in my head!

  • FirstBaby2011 August 30, 2012, 4:37 pm

    When my husband was deployed overseas, we were able to “burst save” a considerable amount of money. The only debt we have at the moment is our house and we were able to build up an adequate emergency fund with the extra income. I currently stay at home with my daughter, but we hope to be able to “burst save” once again when we are both working outside of the home.

  • stu September 2, 2012, 7:07 pm

    This idea reminds me a lot of an exercise routine known as burst interval training. You do intense exercise for a short period of time, have a rest period, and do more. I think having a condense period of exponential saving would be a neat strategy to try out. I’d like to give it a shot, but I’m currently living with a few people who wouldn’t be too keen on the idea of giving up some of the things we really don’t need. I’ve been wanting to get rid of the Directv bill for a while now. I’m out numbered by couch potatoes. lol

  • vida_llevares September 3, 2012, 9:48 pm

    Burst saving is really a great principle. Hopefully, more and more people will practice it.

    The common practice is that once the income or earnings increase, the expenses also increase. Most people tend to peg their expenses in proportion of their earnings or allocate a fixed percentage of their earnings for the expenses.

  • Julie September 4, 2012, 6:21 am

    I didn’t know that the concept of “burst saving” existed but, having read this article, I realise that this is what I was able to do for a few years. I built a quite small savings account of about 4000$ but this is still not enough to supplement a pension. But it did provide the funds needed to establish a small, on-line based business which is slowly but surely compounding my money for me.

    The trick is to save and not to touch the savings – even when things get a bit tight. Ther will be a time when you can use that cash for a better retirement plan.

  • ACSAPA September 24, 2012, 7:04 pm

    Thank you for the informative article about “burst saving”. This is a great idea.
    I only wish I had know about it sooner. There were times when I could have taken advantage of my circumstances to do some burst saving but I didn’t think of it at the time.
    Better late than never.

  • sotally September 30, 2012, 10:14 pm

    I love this idea! I’ve been preaching it to my friends for years, but never really had a good name for it. Unfortunately I didn’t have the sense to do this straight out of college, but I was putting extra money towards paying down my student loans which is definitely a good alternative to saving; I just wish I had been doing both. After marriage and before children, I did up my 401k contribution from 5% to 15%, but once the first baby arrived that shot back down to 5% almost immediately. Kids are expensive! Once the kids are out of daycare and into school, I hope I’ll be able to contribute more to savings again, but in the meantime I’m definitely in one of those lulls between bursts.

  • Orange Julibee October 1, 2012, 8:37 am

    What a great idea. I’m definitely going to try this. I think this will work for me. I tend to do well when working in short, intense bursts. There’s no reason that burst savings can’t work the same way. Thank you for the tip!.

  • Matie October 2, 2012, 7:53 pm

    The key for burst saving is to manage the highest income possible with the lowest spending, but it’s mostly common to have a low income and not much to save. But saving is vital as it still pays off with more time.

    Burst saving is an agressive strategy if you can afford to do so.

  • LoveSanta October 22, 2012, 2:00 am

    I have used the same idea, but usually put that money into my mortgage rather than savings – if nothing else, I figure if I own my home then I need less day to day money in retirement anyway. I still would like more put away for retirement though but with 4 kids it won’t happen immediately 🙂

    Every time I got a pay rise, I would allocate most or all of it to my mortgage. For example, if I got an extra $50 a month, I might increase my automated mortgage payments by $40 a month. That way, my mortgage was paid quicker but it didn’t ‘hurt’ as I wasn’t used to that extra money anyway. The $10 was a bonus for me 🙂

    Another example of burst saving for me was selling some shares I got through work. I had to pay off the employee loan (which I couldn’t) or sell them when I left the job to become a Mum. Glad I did sell them then – I made thousands in profits and those shares are lower than what I bought them for now. Made a lovely dint in the mortgage just when my income was stopping so it was great.

  • MistyR. October 22, 2012, 6:16 pm

    Its like a light bulb went off. I have always considered our retirement saving as one of our bills. We looked at our retirement and were trying to decide how to get a better retirement with out working longer. We thought that we had to add more a month to do this. It never occured to me to make larger deposits when we can and just consider the monthly budgeted amount as a minimum payment. Thank you for this easy and stress free idea!


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