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Why and How to Budget for Retirement

Do you see starting a budget for retirement as a painful process? If so, I hope to change your mind because having no budget causes the real pain. And can lead to having to cut corners during retirement.



Using a budget is no different than getting fit or keeping a home tidy. It entails goals, planning, and organization. Anybody can do it but starting is the hard part because so many people think they have failed when the budget doesn't work out perfectly.


Budgets are Never Perfect

If you accept that no budget, now or when you retire, will be perfect then that’s the right mindset. Homes get cluttered after you tidy up so you clean again. You miss a week of workouts, you don’t just cancel your gym membership, right? So when your budget gets busted just adjust for the next month.



You don’t need a perfect system for your budget. Some would say their budget is a success if it only:


Catches wasteful spending

Keeps them focused on goals

Motivates them to pay off debt


Budget for Retirement Together

Couples who budget together retire together, or something like that. Seriously, the only way a budget helps is if both partners are involved and committed to tracking their finances. Solo budgeting missions are doomed to fail, unfortunately.



And since there are tons of options for creating a family budget, you guys need to agree on the right fit. Do you want to use:


● Spreadsheets?

● Pen and notepad?

● Budgeting software?


Believe me, there is no magic system. The best system is the one that you both like, understand, and can stick to.


Budget Info to Start

Once you guys agree on a method of budgeting you’ll need a starting point. Big data, if you will. You need to know your income and expenses. So use bank records, credit card statements, etc. to gather your monthly spending and revenue. Keys to remember:


● Use take-home pay (after taxes)

● Include all forms of income

● Remember cash spending

● Don’t fudge the numbers on spending


Your goal with this information gathering is to have a clear picture of where your money is going each month. Income tracking is easier, whereas expenses come from various categories. And expenses can vary from month to month.


Be sure to note monthly bills that are set in stone versus ones you can lower if you choose.


*Don’t forget income such as bonuses and tax refunds.


Lowering Expenses to Boost Savings

The next step? Now that you have historical data to look at, you can take a peek at the expense categories. Some people get so serious about debt, they cut out Netflix and other “extras” in their budget. You can make your own choices about expenses. The point is that you can see where your money goes each month and have the option to make changes.



Small tweaks or major lifestyle changes can result in money left over after all bills are paid. Making it possible to add to your savings, boost your emergency fund, and invest more for the day you retire.


Yes, you’ll still need a budget for retirement, during retirement. And that’s ok!


Budgets Result in Better Retirements

A better retirement awaits those who use budgeting to their advantage. So after you have compared your income versus expenses and cut costs you can evaluate your position. Can you save more because your income is well above expenses? Or do you need to bump your income up so there is some leftover money at the end of the month?


If you need income to increase. There are options:


● Overtime

● Second job

● Side-hustle

● Position yourself for a raise

● Change to a higher-paying industry



And if you already have money left over you can direct this money where to go. Just like designating that $280 for utilities each month, you can designate $100 or $500 to go into a retirement account. This is your budget in action. And it is subject to change each month depending on your goals and family needs.


*47% of American savers stopped or lowered their retirement savings contributions, citing the COVID-19 crisis.


Sticking to a Budget for Retirement Success

When you pay attention to your money via a tangible budget, you naturally try to improve your position. It’s like playing basketball with the kids. When you guys are horsing around not keeping score, there’s a different feel. But start keeping score and things get a little more serious, right?



You try to improve your position - you try to win. Same thing with a budget. You see the score and make adjustments so you can win with your finances. It is crucial to celebrate your wins with your finances too. That keeps you motivated to stick to the budget long-term.


Budget Tools

Using the right budgeting tool also helps couples stick with a budget, of course. So no matter where you stand financially, you want to make budgeting as easy as possible.



Here are four software tools for budgeting with a couple of their best features.


  1. YNAB - the acronym for “you need a budget.” - Software is in-depth and teaches new budgeters how to start with tons of tutorials.

  2. Honey Due - only available as an app - No desktop software but it is focused on couples budgeting together.

  3. Albert - not to be confused with Batman’s right-hand man. This app will take some work off your plate - it can automatically create your budget. No desktop software, phone and tablet app only.

  4. Good Budget - This takes the old-school cash envelope system into the digital world. It lets you set money aside ahead of time in a virtual envelope for each spending category.

Simple Budget Buy-in

Believe it or not, some people still use cash. And that old-school envelope system works if you stick to it. Once an envelope is out of dining money - guess what - you don’t dine out until next week or next month. The truth is that any budgeting system or software can work for you if you buy in to the system and trust the process.



If you cheat the system or take a casual approach, then it won’t work as well. Now keep these helpful features of budgeting software in mind:


● Linking bank and credit card accounts

● Automatic spending categorizing

● Investment tracking

● Easy-to-understand charts


Remember that many free versions are available but you get what you pay for. Don’t be afraid of paid options if they fit your needs better. Also, keep things simple. Don’t use a system that takes too long to understand or has features that you will never use. Start simple then go more in-depth later if you need to.


Budget Wrap-up

I encourage you and your partner to start using a budget this week and watch how it changes your financial situation. See if it doesn’t show you where you can improve, opportunities to save, and motivate you to expand your revenue sources.



I don’t think I’ve ever read about anyone saying they truly invested in budgeting and it ruined them financially! Starting a budget for retirement is one of many tools and tactics that can lead couples to the retirement they deserve.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

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