Budgeting can be a challenge regardless of whether or not you’re in retirement.
Unfortunately, thanks to inflation and unexpected expenditures, living on a fixed income can sometimes make it even tougher.
That’s is why it’s especially important to avoid these common budgeting mistakes.
1. Not Accounting for Incidental Expenditures
There are several things that many seniors often accidentally don’t account for when planning a budget. These range from unexpected medical expenses to home and vehicle repairs, annual bills, gifts, vacations, and/or supporting family members.
Long term care and life insurance premiums can also sometimes be overlooked as well. Unfortunately, we often have to plan for the worst when it comes to properly managing our finances.
2. Being Inflexible
Even without unexpected expenses, your spending will likely fluctuate from month to month or season to season. Utility bills can vary based on the weather and regular shopping habits may change. A good budget should also be a flexible one.
Of course, this doesn’t mean you should rely on guesstimates. It’s important to analyze what your expenditures are over the course of time so you can accurately budget for them.
Make sure you allow for some fun expenses as well, like entertainment and splurges.
3. Mistaking Wants for Needs
Sometimes it’s easy to confuse the things you want for things you actually need. If you haven’t budgeted for these things, however, they can really muck up your finances.
Make sure you have a clear idea of what things constitute actual necessities and which don’t.
4. Making Impulse Purchases
Are you a believer in the healing powers of retail therapy? Don’t be, since this practice can seriously wreck your budget. Impulse buys often cause us to stray from our budgets, leaving us strapped for cash later on.
5. Not Having an Emergency Savings Account
Your budget should account for more than just monthly expenses. It should also incorporate savings for emergencies and other potential savings goals.
Are you guilty of one or more of these budgeting mistakes? Do you have any advice or tips to add? Let us know in the comments below.