It is that time of the year for budget tips. It is also time to work out how buoyant our budget is and how financially resilient we will be as retiree’s moving into a new financial year. As I always say “money matters” and it matters more when you don’t have enough to cover basic living expenses. As we are just about to commence a new financial year it is time to review 2013-14 and project our income and expenditure for 2014-15. It is better to understand what is happening with your money rather than seeing it flitter through your fingers without a notion of where it goes. It is so liberating when your expenses for the year are identified and you know that there will be enough income to cover your costs.
There are a number of good budgeting software programs that can be purchased however I have never been a fan of these as most of them are connected to the internet and where your financial and banking information goes, no one knows! If you are confident with online financial software, then go ahead. My preference is use the Microsoft Office Excel Program. I find the program excellent for developing a budget and projecting expenses.
In our relationship I am the finance guru! All that means is that I have taken responsibility for this and report to my “one and only”. I now have our budget and projected expenses in place for 2014-15. If there are any surprises throughout the year this is covered through a miscellaneous allocation of funds. If there are funds over at the end of the year this must be my CEO of Finances bonus? No, it is a bonus for us as a couple to share.
I will tell you what I do and if you are currently not doing any money management as a retiree, now is the time to start. This year I discovered the Excel Personal Budget template. The great part about the template is that it has all the formulas in place and it will automatically calculate your yearly cost for each item and the total costs plus any cash shortage/surplus. The goal is to make it all balance. If there is any shortage then you will need to go back and review what you can live without. If there is a surplus, that is a saving. You can also change the item names to suit, such as Utilities to Electricity. If you do not have a computer you can still have a yearly budget and keep a track of monthly expenses all recorded by hand.
Other tools I use to keep across our expenditure include a yearly Bill Schedule Tool (again in Excel Program). It tells me which month different bills are due e.g. car registration. It is helpful if you are going away on a long holiday to ensure you don’t miss a payment. Direct debit is another option, though this is not my preference. Then I utilise an Actual Expenditure Worksheet for the current year to record all expenses. BJ developed the formulas and this is the sixth year I have used it. The purpose being is that a budget is one matter; another is what your actual living costs are. It is worth investing a little time in managing your finances so that you keep your budget buoyant and don’t end up with “budget blues”.
Top Tips (TT) for Managing and Saving your Money:
TT #1 Draw out cash for groceries each fortnight according to your budget amount. The aim is not to spend above this amount. Never shop when you are hungry – otherwise you will spend more!
TT #2 Give yourself a fortnightly allowance. We have an allowance that gives us freedom to spend or save, it is our choice.
TT #3 Enjoy the outdoors, a park or beach and take a thermos for tea/coffee and pack a lunch when you go out for the day. I am sure that Gen X, Y or Z will keep the Café owners in business with the occasional boost from a “Baby Boomer” who is having a special treat. It is always your choice where you allocate your money. The key goal is to ensure you have enough. Reality Bites: if a retiree couple had coffee out three times per week they would need to allocate $1,500 in their yearly budget; lunch and a coffee for a couple once per week would cost around $2,600.
TT #4 Save money by not buying magazine or books, apart from the occasional one from your allowance. A little indulgence is always permissible. Go to the Library and borrow magazines, books and read the newspapers.
TT #5 Do not get takeaways. Cook extra and freeze. You can then have this on your night off. Just like someone else has cooked for you!
TT #6 For any savings shop around for the best interest rate to grow your money. If you are someone who just has to have that takeaway coffee several times a week then perhaps this will be your method to indulge yourself without the “budget blues” kicking in.
TT #7 Make or bake gifts. If this is not for you then keep all your gifts to a certain price that fits nicely within your budget. Never buy on impulse, purchase sale items or negotiate on the price at all times.
These are just a few tips of many. You can live the retirement you deserve as long as you take the time to track where your money is going and keep some of it. Money was made round to go around (see photo) but it was also made flat to stack! Money matters and “the safest way to double your money is to fold it over and put it in your pocket” – Kin (Frank McKinney) Hubbard.