Managing well your finances is something really important when you are a senior, this way you can be prepared for an emergency and prevent financial problems. This process can be difficult if the person has a fixed income and depends only on his or her Social Security earnings. That is why we will share the secrets of creating a budget as a senior in five simple steps.
- Ask a family member to help you
Some seniors can be reluctant to share their finance details with another person, but we recommend asking a family member to help you with the process of creating a budget as a senior, maybe one of your sons or daughters.
Besides helping you to create a budget, it is important that someone else knows certain things about your finances in case of an emergency or unexpected event. We are not telling you that you have to share every aspect of your finances with them, but at least one of your children should know where to find important financial documents, such as your social security number, insurance policies, Medicare cards, bank account numbers, tax returns, contact information of doctors, health care providers, insurance agents, attorneys, etc.
- Make a list of your expenses and your income
Start by listing all your sources of income: Social Security earnings, pensions, some help your children may give you, part-time jobs, etc. Once you’ve found how much you make monthly, subtract taxes from that number. You can split up the amount of money that will go to taxes in months to do so.
Then, list your expenses. First, go with fixed expenses, such as rent, car payments, mortgage, insurance or any other you may have. After that, go with expenses that usually change, like food, gas, entertainment, shopping, etc.
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- Find out how much you actually spend monthly
Although you may have an approximate of the amount of money you spend monthly, knowing exactly how much is it will be very helpful when planning for the future. Keep track of all the things you pay, you may do this daily or weekly, and keep all your receipts. Also, check you bank accounts and credit card statements. Write down all the expenses or use an app in your phone, if you are a technological person.
Once you’ve done this for a month, compare this with the list of income and expenses you did previously. You may be surprised, sometimes we spend more than we think.
- Think about the places in which you can cut out spending
Once you know how much you actually spend monthly, find things in which you can start spending less money or completely eliminate some expenses. You could change your TV cable plan to a cheaper one if you’re not fully taking advantage of the one you have or cancel magazine subscriptions you do not read anymore.
If you have Medicare or a health insurance, ask if you can get help paying your costs or if there are ways in which you can reduce them.
Another thing that can help is doing a list of the food you need when you go to buy it, and eliminating certain vices, like smoking.
- Set goals
Something that encourages you to start creating a budget as a senior is setting goals. This way, saving money will have a purpose for you. It could be a trip that you always wanted to do or redecorating your house. No matter what you choose, find ways to save money, this way you are prepared for the future and you can treat yourself from time to time.