When you start living on a fixed income, your budget should account for your new financial situation. Here are three tips you can follow when creating a budget, whether you’re revising your old budget or creating one from scratch.
In order to create a budget, you need to know how much money you’re spending each month. It’s not enough to make an estimate, though. Many people forget about the smaller purchases they make, whether it’s that cup of coffee they buy every Friday or a random knickknack they picked up at a garage sale.
Track your purchases for at least one month, and organize the items by category. Your categories may include rent or mortgage payments, transportation, phone, medical expenses, food, clothing, entertainment, and other. Doing this will help you see where your money is really going.
Compare your monthly expenses to your income. Are you overspending? If so, cut back on things you don’t really need. For example, you may be spending too much money on clothes. You can reduce your expenses by shopping for gently used clothes instead of buying them new.
Making these small adjustments should hopefully bring your expenses down to a reasonable number. If that’s not the case for you, consider making bigger changes like selling your vehicle or downsizing your home.
No matter how tight your budget is, try to give yourself a weekly or monthly allowance. This money trick isn’t just for children; plenty of adults find it useful, too. Having a set amount of cash as spending money means you’re less likely to buy things impulsively with your debit or credit card. Use the allowance for whatever you want. After all, you deserve to treat yourself every once in a while.
These three tips should help you get started with creating a budget. For more financial advice, check out the articles and user forums at Super Senior Connection, a friendly online community that’s just for seniors.
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