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Budgeting on a fixed income does not have to be doom and gloom. Learn how to overcome four myths about living well on a fixed income. [[{“value”:”
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According to the National Council on Aging (NCOA), the phrase “living on a fixed income” generally applies to older adults who no longer work or collect a regular paycheck. Once a person no longer receives a paycheck, they depend almost entirely on Social Security, retirement accounts, pensions, and savings. The NCOA also points out that approximately 40% of older Americans rely solely on Social Security income to pay the bills.
That said, it’s not all doom and gloom. A lot of what you’ve heard about living on a fixed income is plain wrong. Here are four examples of lies you’ve probably been told.
1. “You don’t need a budget at all”
You’ll never hear a good personal finance expert say you don’t need to budget because you don’t bring in enough money to fuss over — because it’s simply not true. Whether your monthly income is $1,500 or $5,000, budgeting allows you to make the most of it. Assigning a purpose to each dollar gives you a sense of where your money is going and ways to switch things up if needed.
Creating a budget is as simple as listing your fixed expenses, like rent, utilities, and groceries. Add in the bills you only pay occasionally, such as personal property taxes. Once you know those expenses are covered, add other ways you plan to spend your money. This may include club memberships, dining out, or entertainment.
Is it more enjoyable to budget when you have $10,000 a month coming in rather than $1,500? Absolutely, but the size of your budget doesn’t matter as much as where your money goes. Here are a few tips to make it easier:
Track your spending: One of the best ways to create an accurate budget is to track your spending for a month or two to get a solid idea of where your money goes. Once you know this, you may find money-saving measures, like canceling subscriptions you no longer use.Put it in black and white: Budgeting apps and spreadsheets (whichever you prefer) each allow you to see your budget at a glance — and setting up either tool doesn’t take long.Close any gaps: Once you’ve created a budget, it’s time to get creative. For example, if your fixed monthly income is $2,000 but you need $2,200 to pay your bills, think about ways to close the gap. It could be as simple as shopping around for less expensive auto insurance, setting up a stall at your local farmer’s market to sell crafts or other handiwork, or tutoring children in your area. You might also consider taking in a roommate to cover a portion of the bills. Just make sure you do a thorough background check on anyone you don’t know well.
2. “You can’t have any fun”
Another lie you may have been told is that the fun is over once you live on a fixed budget. Again, it’s pure malarkey. We each get a certain number of days on this planet, and each one is important. Buying into the myth that it’s all over if you’re not swimming in the dough is a waste of time.
Think about when you were a kid and all the times you had fun for free. It might have been as simple as wading in a creek, fishing with a good friend, or riding your bike. The best times in life are still free as long as you’re doing something you enjoy. Take a walk with a loved one or start a book club. Just don’t believe the fun is over.
3. “You can’t spoil the people you love”
You may worry that you can no longer spend money to spoil friends and family with gifts, dinners out, or special trips. If it’s not in your budget, that’s okay! It’s time to get creative again. Rather than buying a fancy gift, make a pan of brownies and spend time with the recipient. Instead of paying for everyone to go out to dinner, agree that you’ll each pay your own portion of the bill.
All anyone who loves you wants is your attention. They want time to hear your voice. You’re the only one who’s worried about not giving them costly gifts. Your presence is gift enough.
4. “There’s no way to save money”
Lie No. 4 is that it’s impossible to save money when you’re on a fixed income. It may not be as easy as it was when you were receiving a regular paycheck, but it is possible. If you’re saving for something special, like a weekend getaway, consider these tips:
Automate your savings: Figure out where you have a little wiggle room in your budget and have that money automatically deposited into your savings account each month.Create wiggle room: You may be able to carve out that wiggle room on your own by using a price comparison shopping app before heading out to the store. Another way to save money is by using a coupon app that can slash the cost of groceries. Deposit any money you save into savings.Earn a little extra: If you’re healthy enough, take on a part-time job to earn extra. Here are 12 side hustles you can do from the comfort of your home.
Circumstances change in each season of life, and change isn’t always easy. Still, with a little creativity, it’s possible to make the most of where you are now.
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