How To Budget On A Fixed Income
It’s Your Retirement – Own It!
The Numbers Game
Numbers don’t really matter that much because if you’re on a fixed income you know it! However, I want to point out that the tips I give for how to budget on a fixed income are relevant in any currency. The amounts obviously change according to other needs and length of time in employment. But, let’s face it, even if you have savings and investments being retired can still put a strain on expenses. Even more so if it’s a new experience for you!
How To Budget On A Fixed Income
1. Start Before You Retire
Disclaimer: I DIDN’T
- There is no getting away from it, bank statements (digital or paper) is the first place to really understand where the money goes. Some banks even have a service where, at a click of a key, it will make a labelled pie chart for you! Budgeting begins with being able to account for every, dollar, cent, penny or pound.
- I have a friend who kept diary for couple months to keep track of “miscellaneous” or as the bank would put it, “cash withdrawals”
- Work towards being debt free. “Working towards” is a teacher euphemism for “not there yet” . The goal is to get as close as you can so that when you really have to budget on a fixed income you have the least scheduled outgoings you can
- Finally, down size. This includes, your car, your house, your holidays. How much your lifestyle will change will depend on how big your budget is.
In my case the changes were big but the rewards were even bigger”
2. Do Your Research
- Go where the people who know are! When you get there ask questions. Somewhere in the wealth of information people love to share are the foundations of your budget.
- In my locality I found the Council had a tremendous amount of information but I did have to ask the right question to get it! A case of “If you ask me I’ll tell you, if you don’t I wont!” I am able to travel free on the buses between certain hours, attend free afternoon concerts at the arts center with touring artists (maybe they like the practice before the major events) and free Tai Chi lessons (part of keep ’em active and out of hospital initiative!) Best of all I am entitled to two free return trips on the train within the state of Queensland. This could be many thousands of miles…..Australia is big!
- Look out for wholesalers selling “damaged” goods. I never realised that the damage could be as little as a scratch and did not affect the guarantee
- Holiday in the off season and give group bookings a thought.
3. Put It Out There
- Begin with getting the family on board. If you have always been the “Bank of Mum & Dad” it’ s only fair to set the record straight. Don’t pretend and don’t apologize.
- Link up with like minded friends when ever possible….open the conversation and share your new found knowledge.
- Remind them that gifts do not always have to be practical. A little luxury goes a long way.
- Even if your working life has never been competing in the materialistic sense you may find it difficult to admit that spending money now is done with more attention. Your focus now is on finding alternatives and opening new doors.
4. Budgeting Post Retirement
- I have covered this more fully in my post for “Budgeting in Retirement 10 Top Tips” so please take a look. This post includes the benefits of Bartering goods and swapping skills
- Team up with a friend to make a trip to wholesalers and bulk buying between the two of you or even a larger group
- Avoid spontaneous purchasing. Wait a few days to see if it’s still a good idea or did you come up with a cheaper alternative. Be aware of the psychology involved in shop layouts that are designed with the sole purose of making you buy something you didn’t come in for! Give yourself a pat on back when you catch them out! That bowl may only be $1 but it’s a wasted dollar if you didn’t need it
- Plan purchases and use coupons only if its something you would normally buy and not an extra.
- Plan for the discounts to stock up on basics
5. Thinking Outside The Box
- Retirement does not have to mean you have given up the option of having an income. How much you are allowed to supplement your fixed income varies considerably but every little helps. You may be able to use the same skills as before but thinking outside the box can be a lot more fun!
- How about shelf stacking, babysitting, blogging, dog walking or turning your hobby into a small income?
- Just as Air BNB provide opportunities to share your home there are also sites where you can share your lawnmower, tools and garden!
- Volunteering can also be a Win Win activity. I have always wanted to learn to sail and now that I have joined the local Sailability organisation ( we take adults and children with special needs sailing) they teach me to sail…..for free. The added bonus is I have also make a lot of new friends and enjoy our socialising activities which usually take part on the water.
6. Be prepared
- Save for emergencies: Yes really! I must admit this is the one I find the most difficult. We are in the process of renovating our houseboat so I’m frequently arguing with myself that a couple of new blinds are essentials!