Thursday, August 14, 2014

Controlling Expenses in Retirement (or while not working)

Someone asked me the other day how we work the family finances now that I am not working aka retired aka looking for second career?  We are using the same system that we used when I worked, except money only goes out the door, no money comes in.

First, we set a budget for all common household expenses like mortgage, insurance, groceries, entertainment, etc.  The budget can be by week, by month, bimonthly, whatever suits you.  In the case of retirement, the budget amount should be set at or below the expense level in your retirement plan.  Our "allowance" for personal items like clothes and hobbies is also included in the budget.

Second, we accumulate all paper receipts and I also get them downloaded into Quicken on my PC.  At the end of each budget period, we total them all up and compare them to our budget.  Any savings are accumulated in an account that we use to pay for house taxes and vacations.  Any extra spending has to either come out of the tax and vacation account or it is carried over to the next budget period.

Third, monitor spending and decrease it if you are running over too much, cut discretionary things like restaurant meals etc. If you are spending too little, you can increase spending or go on a big vacation.

If you have a sound retirement plan, and follow this approach or something similar, you should be able to enjoy a long and stress-free retirement.

1 comment:

  1. Our "allowance" for personal items like clothes and hobbies is also included in the budget.www.arthayantra.com

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