Let's face it, your budgeting days are never behind you. Budgeting only gets harder when past retirement age when you’ve got a limited, fixed income coming in. And when you’re no longer working, you can’t just pick up a shift or two to make up for extra expenses.
Thankfully, living on a fixed income doesn’t have to be maudlin; with the right tools, you can thrive on a budget.
1. Account for Where Your Money Goes
It’s important when you’re on a budget that you know where your money goes. Whether it comes in, goes into savings, pays for bills, or gets spent on fun stuff, you need to know where all of your monthly income is going.
Mark down the details so you can fully grasp how much money you bring in every month, how much your monthly bills and living expenses are, and how much you have left over.
If you don't have an established budget, you can track expenses on a simple spreadsheet, budget worksheet, or budget calendar. Tools like AARP's Money Map (it's free) can also help you see exactly what your finances are and where your money is getting spent to help you stay on budget, save for future expenses, or get out of debt.
2. Be Aware of All Your Charges
Awareness is one of the greatest safety nets you can give yourself when you're living on a fixed income. Make sure to check and verify charges on your credit cards or bank accounts. The minute something goes up or you get charged wrong, you'll be able to see it and move forward accordingly. You'll also be aware of recurring charges for subscriptions or memberships that you may not need anymore and want to cancel.
3. Be Smart With Grocery Costs
Grocery store prices are skyrocketing, so food bills can eat up your monthly income really quickly. So, to keep on budget, try new ways to make your ingredients go farther. While there are a ton of different ways you can avoid food waste and keep your grocery budget from going down the drain, making every single apple peel count can turn budgeting into something exciting.
For example, you can make stock out of all those fruit peelings and tiny bits of leftover vegetables you didn't use in your recipe. Make it a fun Chopped style challenge to make ingredients stretch across an extra meal or two. Similarly, one senior dog owner we know cuts their dog food costs by adding the raw veggies they don't use (like green beans and carrots) to their bowl.
4. Plan for a Few Splurges
In a way, living on a fixed income can be compared to dieting. When you tell yourself you can’t have something, you only crave it more. Get ahead of that human need by budgeting in one or two unnecessary things to spend on. Whether it’s a spending budget at the antique store or covering the costs of getting your nails done every week, giving yourself something permission to spend money occasionally on something that you love, but isn't strictly necessary, can help make it easier to cut back elsewhere.
Just because you’re living on a fixed income doesn’t mean you have to live like a monk. You need to enjoy your life, and that means doing fun things every once in a while.
5. Ask for Those Senior Discounts
Don’t be shy about asking for senior discounts! If a business has them, take advantage. Make it a habit of asking every time you go into a new business. Eventually, you’ll have a long list of the places in your area that do and you can start going to them more frequently to keep your other costs down.
6. Consider Growing (and Selling) Your Own Produce
Growing your own produce is a great way to get outside, exercise a little, lower your grocery costs, and make a chunk of change on the side. From hay bale gardens to full-on plowed plots, you can grow a garden as big or as small as you'd like. And there are delicious fruits, veggies, and herbs to grow every season. As your harvests get bigger and bigger, you can take some of that excess to a local farmer's market to sell.
If there's not one near you, you can always post on social media as well as put up signs in local shops offering your contact info and the surplus you typically have. Home-grown ingredients really do taste that much better than store-bought, so people might be lining up to your door to partake in your good prices.
7. Sign Up for Local Services if You Can
You might qualify for local aid services, such as meal deliveries or lower medicine costs. Contact your local health and human services department to see what programs are available. If you can get into one of these, that’s one area of your life you can spend less.
If you or someone you know is disabled and transitioning into their fabulous senior life, consider checking out the National Council on Aging's Benefits Checkup. It's a one-stop shop for getting folks with disabilities into the right programs that can help them lower costs on medications, groceries, and more.
8. Take Up an Old Trade (or Try a New One) to Make Extra Cash
In your youth, you might have learned a trade or a skill that you just couldn't make as much time for as life got busier and more complicated. If you want to pad out your fixed income with some extra spending money, why not revisit your old passions and skills for an at-home job? One South Carolina woman in her 70s we spoke with transitioned her hair salon into a small home operation where she cuts hair a few times a week to supplement her monthly income.
Or, if you're a craft lover, you could advertise your wares and services online. From crocheted blankets to custom scrapbooks, you can easily turn those hobbies you've had for years into a side hustle using social media and marketplaces like Etsy.
There are even simple things you can try though technology today to create passive income. For example, if you're known for your funny sayings or creative sketches, you can add them to shirts and products at Red Bubble and make some extra cash without having to worry about a product inventory.
9. Put Money Away Every Month
Try to make an effort to put money away every month in savings. It’s okay if you can only afford to put in a small amount each month. The point is to create extra security for yourself, so putting money back into savings is a great way to prepare for extra expenses.
10. Only Accrue Manageable Debt
Now that you’re not working as many hours and your kids are out of the house, you might be tempted to buy something large (like that boat you've always wanted). But, if you’ve got a fixed income, you should avoid accruing large amounts of debt.
If there's something you have your heart set on that could put you into debt, look into alternatives. Will a used boat, a smaller boat, or even a fishing kayak give you the enjoyment you're looking for without the debt? Do you have the funds to join a boat club that lets you enjoy boating without the high cost and commitment of owning one? Thinking outside the box can help you live a life you love without going into debt you can't handle.
In American society, credit scores are tied to credit activity. But, debt is debt no matter if it’s $50 or $5 million. So, stick with debts that are manageable for you instead of taking on massive amounts that might put you under water.
If you really want to be proactive in getting out of your debt, pay down the principal by adding extra to your monthly payments. You’ll end up paying less in interest.
11. Don't Forget to Cash in Credit Card Points/Cash Back
Going on trips and vacationing when you're on a fixed income can feel like a big challenge. But, if you're using credit cards on a monthly basis, then you're probably adding up some significant cash back. This is basically free money you earn for your usual spending, and can give you the extra boost to take that day-trip to the beach or see that broadway tour that's coming to town.
Check with your credit card company to see what purchases can get you double or triple cash back. Deliberately using your credit card for something like restaurant bills can help you maximize on the amount you earn.
12. Address House and Car Issues Before Something Happens
We’ve all had the dreaded moment when a strange icon pops up on your dashboard or a random spot appears in the ceiling. These unexpected costs can be a particular challenge when living on a fixed income. Prepare for this by trying to address house, car, and medical issues before they turn into a bigger problem.
If you’re slowly working your way through home and car repairs, consider it as an investment in your future security. By doing so, you'll usually pay less money now than in the future.
Don’t Just Live on a Fixed Income — Thrive!
Getting older brings with it a whole host of new challenges, and we can’t prepare for all of them. But adapting to life on a fixed income is doable. Yes, it takes some getting used to and probably more numbers watching than you did in your youth. But if you build a routine around your new income, it’ll feel like second nature in no time at all.