As a senior, budgeting on a fixed income has its pros and cons. On the plus side, you know exactly how much money you will have each month, so your budget can be specific and tailored to your income. However, it can be challenging to stay within your budget when you can’t just make up the difference by working extra hours or taking on more projects. Keep reading to learn how to budget on a fixed income for seniors.
Track Your Income and Your Expenses
The first step to budgeting is knowing your income and expenses. Most people now use credit or debit cards for their purchases and direct deposit for their paychecks or retirement checks, which makes it easy to track your income and expenses online. If you aren’t having your retirement checks direct-deposited to your bank account, call the company that sends your checks and arrange to have this set up. It will make your life easier and budgeting considerably more convenient! You’ll just need your checking account number and your bank routing number. If you are still using cash or checks for your purchases, try to move these transactions to a credit or debit card. Many credit cards offer rewards that give you a percentage back on all of your purchases. Just make sure you pay your bill each month!
Once you have moved your income and expenses to digital mediums, you’ll be able to track them very easily. Apps or websites like Mint actually track your spending and organize it by category for you, so you won’t even have to do any of the work yourself!
Evaluate Your Needs
Now that you know how much money you have to spend each month, and how much you’re currently spending, you can use your budget to adjust this spending according to your needs. Are you overspending and in danger of draining your retirement account? If so, you’ll need to cut back on some of your expenses.
One way to do this can be by moving to a senior living community. If you own your home, selling it and moving to a senior living community will eliminate the expense of a mortgage, home insurance, and home maintenance costs. Senior living communities also usually handle your utility bills for you, so you don’t have to worry about variable electricity, water, or gas costs and paying all those bills each month. Many communities also provide meals and include food as part of their cost, which means you might actually end up spending less on food than you do now! They also often provide entertainment and activities at no additional cost.
If you find you are already spending less than you receive each month (good work!), it’s time to decide what you want to do with the leftover money. Would you like to donate it to a worthy cause? Save up for a big expense? Start a scholarship fund for your children or grandchildren? The choice is yours!
Track Your Debt
If you find yourself in debt, whether it is from a mortgage, car payment, credit card debt, or something else, make sure you’re tracking this debt and paying towards it each month. If you have credit card debt, or debts in many places, you may want to speak to a debt consolidation counselor, who can help you avoid paying high interest rates and manage your debt more efficiently.
As you can see, creating a budget for your fixed income isn’t as hard or overwhelming as it may seem. With a little time and effort to start with, you can create a solid financial plan for your present and your family’s future.