Shelley ELiving on a fixed income in retirement can be a challenging adjustment for any senior to make. Here are some tips on how to make sure your limited funds last.
1. Live within your means.
You may have been able to get away with splurging when you were younger and not retired. Why? Because you probably had employment and sufficient income to back it up. Once you’re no longer working, however, splurging should be eliminated or at least minimized, as a fixed income may not be enough to cover any outlandish expenses.
Living within your means may be challenging, especially with all the free time you now have on your hands. Do your best to spend responsibly, however, so you don’t put yourself in a financial bind when your ability to work and earn extra income is diminished.
2. Save money for a rainy day.
Many people, whether seniors in college or senior citizens, don’t have emergency funds established. This puts them at risk of going into debt or experiencing a financial crisis should an unexpected expense pop up, such as a car or home repair, medical bills, etc.
While many say you should have between three to six months of expenses saved for your emergency fund, now’s not the time to worry about what you don’t have. Instead, start putting away some of your income each month to help build your fund. You never know when you might need it.
To ensure your emergency fund stays reserved for emergencies only, put the money in a separate checking or savings account. This keeps it accessible, but not mixed in with your other money, which could lead to you spending it.
3. Make a budget.
You don’t want to wing it with your finances when living on a fixed income. You can avoid this by making a budget that ensures your necessities like rent, utilities, food, etc. are covered every month.
With your necessities covered, you can then allocate the rest of your monthly income to other things, such as building that emergency fund, recreation, and more.
Once your budget is created, it’s essential to follow it and use it to guide spending.
4. Prioritize your spending.
A great way to manage your fixed income is to uncomplicate your finances. You may feel stressed that you have so many expenses and such a small cash inflow each month.
To simplify everything, make a list of all of your expenses. Put the mandatory costs at the top, such as your mortgage/rent, utilities, food, insurance, prescriptions, etc. Those are the expenses you should pay first every month. Until they are paid, you shouldn’t waste any of your funds on nonessential items.
As you can see, this and the other tips above help to instill some financial discipline into your retirement routine, which is crucial to surviving on a fixed income.
5. Get the biggest bang for your buck.
Some of your newfound free time should be used on learning to become a smart shopper. There is no shortage of online resources that will tell you where and how to find the best deals, so be sure to make use of them.
Use coupons whenever you can. Buy groceries that are on sale. Take advantage of buy-one-get-one-free opportunities at stores.
Many senior discounts can help you save money on dining, travel, shopping, and more. Keep your ID handy to show proof of your age so you can enjoy these affordable offers.
Mark Luigi
