Your budget needs to give you an overall healthier financial lifestyle that is sustainable for your savings and income, but also allows you to enjoy the retirement you have worked for. There are a few things you can do to help make your budget a positive step to the lifestyle you want and not a stressful:
Be Honest
Start with a realistic analysis of what you are spending now and where you are spending it. Use a few bills and credit card statements from different points in the last year to give you an idea of seasonal changes in your spending. The more exact you are with your starting numbers, the better you will be able to predict what you need and what you can change. Simply estimating the percentage of your pre-retirement income you will need in retirement will not give you the whole picture.
Get Help
There are many budget guides and tools available on the Internet. Most banks insurance companies have free budget calculators and downloadable charts available. These resources will also help you make sure you have taken all of your expenses into account. Your budget should be part of your overall retirement plan, and your financial advisor can be a resource for you.
Expect the Unexpected
Include some form of saving in your budget. Whether that is all going to an emergency fund or some of it is going towards a big trip, make sure you have built in some flexibility to your budget. If you need to access money unexpectedly, being able to use what had been part of your retirement budget is preferable to dipping into your larger retirement savings. Between inflation, rising health care costs and volatile financial markets, you want to feel as prepared as possible.
Simplify and streamline
When you have the option to pay monthly without being penalized, take it. It is much easier to plan for predictable monthly expenses than for large or fluctuating bills. Paying monthly for property taxes or choosing a monthly plan for utility bills takes some of the guess work out of your budget. As well, try and keep your bill payments coming from one account or one bank account and one credit card. The more places the money is taken out of, the harder it is to track.
Stick with it
Here is that diet analogy again. While dieting, you track your progress, whether it’s by checking yourself in the mirror or getting on the scale. Stay accountable with your budget also. Try, especially at the beginning, to keep all of your receipts to see how your spending compared with your budget. Making necessary changes to the budget and to your spending will keep you on the right path.