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Money Management in Retirement

With retirement comes the privilege of a relaxing life but also the responsibility of demonstrating proper money management. As many retirees live on a fixed income, spending must often be reduced to a proper budget. 

The very first tip in proper money management in retirement is to track spending and track income. All of it, even cups of coffee at Starbuck's.  Tracking and logging spending will present the opportunity to determine which sort of spending is necessary and which is not. Also, it gives a good outline of a person's  monthly expenses. Having an outline on monthly expenses will ultimately help set a proper budget. A person an even go as far as budgeting for separate categories. For instance, budgeting $100 per month for entertainment will limit spending. Also, in cases where the expense is less than the monthly budget, a surplus results, which in turn can be saved for future emergency expenses. Another easy trick in reducing costs is to pay utility, credit card, and other payments on time so that costly late payments are eliminated.

However, budgeting may not be enough and there may be times where not all expenses can be paid. Therefore, it is essential to make a prioritized list of all expenses. House rent, food, and other essential would be on top of the list as shopping and entertainment expenses would be on the bottom. Because paying rent and being able to eat is more important than hobbies, expensive hobbies should be replaced with other recreational activities that do not drain from the retirement fund. Also, credit cards should be completely avoided if at all possible. Credit cards are very useful at times, but their high interest rates can eat away from the retirement fund and decrease the monthly budget.

The essence of proper money management is to cut costs where possible. An easy trick in doing so is reducing the use of utilities to the absolute minimum. Leaving lights on when leaving a room, letting the water run when brushing teeth, leaving unused appliances plugged in and having the air conditioner running at all times will all drive up utility expenses and decrease a person's budget.  When it comes to reducing travel costs, retirees should have their loved ones visit as opposed to them visiting their loved ones.

There are many other money management tips.  Following these simple guidelines will help people adjust to living on a fixed income. Overtime, it becomes easier to get a better handle on money management.