Budgeting Before Retirement

Preparing for retirement does not happen overnight. You need a lot of time to invest in order to achieve the lifestyle you want once you retire, starting with sticking to a budget. And just because you are newly employed does not mean you are excused from preparing for retirement. In fact, the earlier you prepare your budget for retirement, the more secured your financial future will be. However, that is not easy to start with, especially if you do not have enough money to make ends meet.

But starting a budget can be easy. You could simply organize what you should spend money on. The difficult part, though, would be sticking to a budget which requires a lot of discipline. Here are some great suggestions in keeping that money secured for your future.

Think about what you are spending on – You have to be practical and pragmatic in how you spend your money. For instance, you do not have to buy a 4-wheel drive if you live in the tropic. You do not have to buy a riding lawn mower if your lot has less then 10 square feet of grass. You do not have to buy designer jeans if you can buy a more reliable yet less expensive pair? Eliminating some of the spending waste gives you more for the things you really need.

Work on decreasing your debt – If you already have a heavy credit card debt, you do not solve it by applying for another credit card. Aside from spending less money, you need to designate a specific amount that aims to decrease your debts.

Set an amount to save – Treat saving like a utility bill, it is very important that you pay regularly. For example, set aside at least 5 percent of your monthly take home pay. It may be small, but as long as you pile up on your savings (without spending any of it), you will realize years from now that it is all worth it.

Have your entire family involved in budgeting – How can you save money if your family still spends it recklessly? Gather your family around and discuss about budgeting. Everybody has to take part so that less money will be spent and more money will be saved for more important things aside from your retirement (such as your children’s college education).

List down your fixed expenses – Create a list of your fixed expenses that you pay every month like mortgage payments, car payments, utility bills, medical bills, clothing among others. Multiply it by 12 to get your yearly total. Then, subtract your total expenses from your yearly take home pay. If the result is way too low, or worse in the negatives, you have to be scared. This gives you an idea on what luxuries you could let go off to make way for savings.

Stick to your budget – The secret of a successful budget is to stick within your budget. Although an occasional slip would not jeopardize your efforts, but constant deviations from your budget plan could cause you to become deeper in debt. Among the that you can do to stick to your budget is to limit your usage of credit cards, logging everything you spend and cutting out the expenditures that are not necessary, quitting bad habits like smoking among others.


Posted by Ardent Editor on Jun 12 2008 in Retirement 101

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