Although one of the most common retirement planning questions is, “How much money will I need for a successful retirement?”, it may be more important to focus on how much income you’ll need during each of your retirement years. And, in order to do that in an effective manner, you’ll want to try and create a budget with your desired lifestyle in mind.
One of the beginning stages of the overall financial planning process is writing down your goals, and what you want to achieve in retirement. Now, it’s important not to be afraid about enjoying your life when creating your budget. Setting budgets is one of the most effective ways to get your spending habits under control. However, the monitoring of purchases and cutting back on expenses to better match your source(s) of yearly income is easier said than done. Day-to-day lifestyle habits and certain psychological instincts make it increasingly difficult for people to stay on-track when it comes to their budget.
Think about the different areas of your life that will need to be funded during retirement. It might be easier to address these items if you segment them into separate buckets like essential living expenses, health care, entertainment, and unplanned emergency situations. Having expenses segmented into buckets will make it easier to identify the income sources needed to fund them. The most secure income streams should be used to fund the highest priority items.
As a consumer, it’s important that you mind your mood when spending. Studies show that unhappy people inherently save less, spend more, and have a higher propensity to consume whereas happy people showed characteristics that were exactly the opposite and they had more control over their spending habits. When thinking about making your next big purchasing decision, try taking a step back to evaluate your personal state of well-being.
Ultimately, you want to try and think about where you’re spending your money and ask yourself, will my purchase make a true, positive difference in my life without jeopardizing my wealth? If it’s been awhile since you’ve last reviewed your current financial situation, then Click HERE to request your complimentary, no obligation retirement review. In the end, creating a more explicit budget will help you to decide what you can cut out in terms of the more desirable, maybe unaffordable, and perhaps unnecessary expenses.