Spending is underemphasized as a major component of retirement planning, which can pose challenges for spendthrift individuals and families in two key ways.

First, during working years, extra cash is mostly spent, not saved and invested for the golden years. Second, it can be quite difficult to adjust when the former standard of living is no longer unattainable in retirement.

Although it is always best to develop good financial habits early in life, it is never too late to start making better decisions with your money. If these spending pitfalls sound like you, it may be time to consider a change.

As you earn more, you spend more. With each raise, closed deal, or commission check, try to commit the bulk of your new income to savings and investments, not lifestyle expenses. While it is important to enjoy your success, many individuals unconsciously increase their “fixed” lifestyle expenses at the same rate as their growth in earnings. Once accustomed to a certain standard of living, scaling back can present a real challenge and even include selling assets. Before committing to new obligations, like a bigger home or nicer car, really weigh whether it comfortably fits into your financial picture.

[See: 9 Investing Steps From Warren Buffett’s Playbook.]

When you earn a raise or commission, try to allocate at least 70 percent of it toward your cash reserves and investments. If you aren’t already maxing out your 401(k), consider increasing your contributions. If you already are making the maximum annual contribution to your retirement account, think about using an individual brokerage account to invest extra cash. Use the remaining 30 percent to treat yourself, but stay within the allotted amount.

Assuming you only need to max out your 401(k) to stay on track. Successful individuals with high incomes are typically able to contribute the maximum annual amount to their retirement plan each year. However, that doesn’t mean your efforts to save for retirement should stop there. Depending on your retirement goals, the annual contributions may not provide your desired lifestyle over a 30- to 40-year period of retirement. If you have the means to save even more, why not?

Instead of spending extra cash each month, consider opening a brokerage account and investing the funds. Over the long term, you may be surprised at the difference this can make. Before investing, always make sure you have enough cash on hand to cover your emergency reserves and any other short-term needs. While keeping too much cash can be a bad thing, funds for short-term goals (typically five years or less) should be kept in savings to avoid short-term market volatility.

Underestimating what it takes to cut back later in life. During your high earning years, it can be difficult to envision what cutting back may really look like. For example, many couples decide they will downsize their home in retirement as “empty nesters.” However, many find that they aren’t downsizing in cost, but perhaps just in size and maintenance with the purchase of a newer condo or townhouse. Understandably, many of us don’t exactly dream about a reduced quality of life in retirement.

Change can be tough, particularly when it is drastic. If you realize your current lifestyle isn’t sustainable, develop a plan to gradually cut back. Saving more today means greater resources in retirement. For many investors, the goal is to make a seamless transition into retired life. If your spending is an issue today — tackle it — because your preferences are unlikely to change on their own.

Everyday decisions can add up big over time. To illustrate how daily purchase decisions can materially impact your savings over time, consider the following example:

You are in the market to buy a new car and are deciding between two vehicles: the newer model of your current sedan or a luxury SUV with all of the bells and whistles. Although you can afford either with your monthly income, the luxury SUV is much more expensive. While the sedan down payment is $1,000 and the five-year loan monthly payment $300, the SUV down payment is $6,000 and the five-year loan monthly payment is $1,100.

[See: 9 Ways to Avoid 401(k) Fees and Penalties.]

What would happen if you chose the less expensive sedan over the SUV, and invested the cost savings? By the end of five years, you would have saved more than $62,000 in today’s dollars, assuming a 6 percent return. But what if you kept the funds invested for another 15 years after the car was paid off? Without any additional contributions, and assuming the same 6 percent rate of return, your investments could have grown to nearly $150,000 — just by choosing one car over another 20 years ago!

Of course, this is an overly simplistic example and does not account for inflation, taxes, expenses, or the variability of investment returns over time. However, it does illustrate the potential significance of the daily financial decisions we make.

Why everyone should consider automating their savings. It isn’t often that the best way to do something is also the easiest. Whether you’re saving for retirement, a home, or just building a cash reserve, consider the following strategies to automate monthly savings and encourage the development of healthy spending habits over the long-term.

Pay yourself first, especially for retirement. If you aren’t currently maxing out your 401(k) or retirement plan at work, try to make this a priority (cash flow permitting). To reach this goal, each year consider increasing your contribution by 2 percent. Since 401(k) plans are tax-deferred retirement accounts, you will also reduce your taxable income in the process.

Create a separate account for each of your goals. At your bank, consider creating a separate checking or savings account for each one of your goals. Having separation between savings buckets allows investors to visualize and appreciate their progress. It is also transparent. You’ll easily know where you stand and what you can (and can’t) afford. When you only have one account, it is much easier to over-extend yourself, which only winds up hurting you in the long run.

Here’s how it works: if each paycheck you receive is deposited into your checking account, you can set up automatic transfers so a portion of the funds then flow to your other accounts (e.g. college fund, vacation fund, and investment account.) If you own a home or a rental property, this strategy is a great way to make sure you have money set aside for unexpected repairs or maintenance.

This strategy is a favorite among our clients, especially when their cash needs are fully funded. Even though investments in a brokerage account can be liquidated and used for any reason, at any time, the separation is quite helpful for avoiding frivolous expenditures. Extra cash is a lot easier to spend when sitting in the bank.

[See: 13 Ways to Take the Emotions Out of Investing.]

Retirement planning doesn’t have to be a hassle. By automating your savings and keeping an eye on expenses, you will have greater flexibility later in life.

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How to Avoid Derailing Your Golden Years originally appeared on usnews.com