Retired seniors enter a beautiful new chapter of life where you no longer have to build plans around a work schedule, growing a family, or any of the other obligations that take a front seat in our lives in the early years. For many of us, these “golden years” aren’t a complete free-for-all either. We have to be mindful about adjusting to life on a fixed income and making decisions that will maximize our finances so they last throughout the rest of our lives.
Though many retired individuals need to stick to a budget, it doesn’t mean you still can’t live well if you can learn to focus on the right things! Keep reading for advice to help anyone living on a budget to maximize their spending in the right places to bring the greatest joy. Before we dig into the tips, please remember to consult with a trusted financial professional before making any changes to your financial plan or family budget.
Have a plan.
Every smart budget begins with a plan. This isn’t just a plan for what you can spend, but it’s how you want to spend it and where it will have the most impact. Of course, there are the basic needs which must be accounted for, then there are the wants and nice-to-haves. As a retired senior on a fixed income, you must plan to first take care of those basic needs. Then, you can map out how much is left over to spend on things and experiences which are not essential but enjoyed. When you put a plan on paper, and begin running the numbers, you will have a better idea of what you monthly allowance should be and where it should go. As with most things in life, it is best to start with a plan!
Communicate your wants and expectations.
Yes, you want and need to have a comfortable place to live, food on the table, and clothes on your back, but beyond meeting your basic needs, it’s reasonable to expect that you will have wants and expectations for your quality of life while in retirement. Living life on a budget doesn’t mean trimming off every little extra you might enjoy. Rather, it’s planning carefully and intentionally so you can enjoy those little extras. If someone else is involved in your finances or helping you to manage your spending, it’s important to have an open conversation with them about your wants and expectations for how you wish to live. This may mean dedicating a portion of your budget to travel, gifts for loved ones, or enjoying dinner out. It doesn’t take a lot of money to still live well and enjoy various experiences. If you plan ahead and communicate your expectations, you’ll be able to manage expectations and enjoy a greater quality of life.
Focus on no-cost and low-cost entertainment.
There are so many things in this world to enjoy that do not require a lot of money or any money at all. A walk in the park, a picnic, attending a free community event, or visiting with a friend are all activities that are readily available and very budget-friendly. Best of all, these are rich experiences that focus on the memories you’ll create rather than receiving something material or fleeting. Even if your retirement budget is very modest, you should feel encouraged to know that most communities enjoy supporting their retired residents through low-cost and no-cost activities that take place year-round. Check with your local YMCAs, senior centers, libraries, even schools for opportunities to get involved and meet new people.
Spend where it matters.
However you choose to allocate your budget for living expenses, be sure to consider where it will have the greatest impact. Are there areas where you can find cost-savings or reduce expenses so that you can spend a little bit more where you’ll enjoy it? Things like utility costs, car repairs, healthcare costs, and more are usually things you can shop around for and reduce the cost of with a little bit of research. You may even find a better-quality alternative! Then when you save on these things, you can reinvest that portion of your budget into enjoying an evening out with dinner and a movie, purchasing new patio furniture or a recliner that you can enjoy every day. By focusing your spending on high-impact items and experiences, you’ll enjoy a greater quality of life while sticking to your budget.
Leave room for surprises.
Surprises can be both good and bad when it comes to finances. Sometimes you’ll find cost-savings and sometimes something will crop up that will cost you money outside of what you had budgeted. A home or car repair is one such example. When setting your budget in retirement, be sure to account for both little and big “surprises” which can throw off your budget during any given month. Create a “slush” fund and only dip into it when it’s needed. If several months go by where you don’t have to use this fund, you may be able to pull some money from it to buy a nice-to-have treat!
Keep a clear perspective.
And finally, keep a clear perspective as it relates to life on a budget. Whenever we’re given constraints, it’s easy to feel like we don’t have the freedom to do whatever it is we want to do. But in retirement, time is the real freedom! Sure, you may have to live within a reasonable budget to ensure you’re a responsible steward of your retirement fund, but there is so much you can enjoy living life on a budget. Keep a grateful heart for all of the non-monetary blessings you have in life, and with that in mind, the size of your living allowance will hardly be a concern.
As a retired senior, it can be challenging to navigate the new waters of balancing a fixed income while still enjoying the golden years to their fullest. By applying some of this advice to your own finances, we hope you can find both stability and freedom in living well on a budget. Remember, before making any changes to your finances or budget, it’s wise to speak to a trusted financial professional who can guide you in the right direction!