Senior citizens must face the necessity of creating a budget during their retirement in order to keep track of all personal and household expenses.
A budget is more beneficial for senior citizens given the fact that as people age, more frequent and larger expenses can occur at any given time. These expenses are mainly categorized as personal expenses, such as medical bills, medication, co-payments at the doctor and other number of expenses associated with elderly individuals. A budget is also essential when senior citizens are living on a fixed income, requiring keen attention to detail to allocate specific portions of their fixed income to their greatest personal and household expenses. The first step that senior citizens must do when creating a personal and household budget is to separate expenses as personal and household expenses. This following list represents the most common personal expenses that must be separated from the household expenses list:
- Car payments
- Debt payments
- Entertainment and Recreation
- Medical bills
When creating a budget for senior citizens, it is crucial to note that medical expenses, medication payments and other healthcare costs can take a larger portion from the fixed amount of income that is received every month. This characteristic is the main difference that distinct normal budgets from budgets created for senior citizens. Household expenses can be determined as follows:
- Trash service
- Home maintenance and repairs
The next step when creating a budget is to create a monthly income list. Senior citizens must limit their expenses to their monthly social security check.
All other forms of income, including social security, must be jotted down on the monthly income list. Wages earned from working part-time, interest received from savings accounts, CD’s, retirement funds, royalties or any other form of income must be separately shown on the monthly income list along with its respective amount received each month. Creating a monthly income list is necessary so that senior citizens can break their income and expenses evenly. When the expenses are lower than the total amount of income received, this creates an ideal situation where extra funds are available for more spending or savings.
The importance of creating a monthly expense list is just as important as creating a monthly income list. Seniors often overspend due to the unawareness of what their actual expenses are and how their income is spent on a monthly basis. Not having a precise organization of all the required expenses with extremely limited income is a recipe for financial disaster. Given this reason, it is important for senior citizens to jot down both personal and household expenses on the monthly expense list along with its respective amount that is estimated to be spent during the course of one month. Another essential step in the budgeting process for senior citizens is the allocation of funds from all income sources. Each expense, both within the personal and household categories, should have an allocation of funds every month. Let’s pretend that $80 is allocated to the electricity bill every month. The allocation of funds should stay within the specified amount of $80 every month. In order to comply with a budget, senior citizens must do all their best to go stay within the established allocation every month.
Personal and household budgeting for senior citizens has a few distinctions from regular and traditional budgeting. Its main differences are the proper allocation of funds toward the most essential personal and household necessities, as well as using a few strategies of allocation of funds and separation of expenses due to the limitation of income sources given the age or situation of each senior citizen. Teaching senior citizens the importance to stay on a budget each month and visualize all expenses is fundamental to track where the money is going every single month. This budgeting process and step-by-step guide are a necessity for many seniors across the country. These strategies must be practiced more actively in order to avoid financial struggles in current economic times.