Successful money management starts with a commitment to living within your means. In our culture of instant gratification, it can be hard to distinguish wants from needs. As an older adult, you have probably reached the milestone of retirement. To make your retirement dollars stretch as far as possible, it is particularly important that you sacrifice wants for needs. Good money management can help you live within your means.
Living on a fixed income
After years of working and increasing income, you have earned a well-deserved end to your career. But with retirement comes the last of your pay raises. Costs go up, but your fixed income does not. This is the time of your life that requires you to have a good handle on money management. You need to find as many ways as possible to save money. Try starting with these money-saving ideas:
It may require a lifestyle change, but managing your money so you can live on a fixed income is wise. It can extend your years of pleasant living and help you prepare for future or unforeseen expenses, such as medical costs.
Avoiding credit cards
Now is definitely not the time to rack up credit card debt. Try to avoid their use completely if at all possible. Plan your budget and use proper money management so you live within your means and do not need to use a credit card. If you find that you truly do need more money to live, consider using your home equity. Instead of a home equity loan, which requires monthly payments that you may not be able to afford, consider a reverse mortgage. With a reverse mortgage, the lender makes payments to you. The loan is either repaid when you sell your home or pass away. Talk to a financial advisor first to see if this is a smart option for you.
Retirement plans have been front page news in the past few years, mostly in negative ways. Polaroid retirees watched their pensions disappear. Enron employees were prodded to put their retirement money into Enron stock, and you know what happened to that. Then there are General Motors's current problems.
It's hard to save for retirement when you have a young family. Here are some things to consider.