Living on a fixed income can be difficult. While it's not easy, retirees, disabled people and others living on a fixed income can benefit from good budgeting practices. By tracking your money and cutting unneeded expenses, you can stretch your income.
- List all your expenses for one month.
At the end of the month, carefully review your list and ask yourself questions like, "What did I buy that I don't need? What could I have spent less on? Does my income more than cover all these expenses?"
- Are your expenses covered?
Once you know how you spend, make certain your income covers expenses. Then, cut those expenses until you're actually saving money. You never know when an emergency expense might arise.
- Think of your future.
To have money for future emergency expenses, start saving now. Start small, if you must. Then gradually increase the amount you put away.
- What about inflation?
When you're on a fixed income, a big worry is inflation. Inflation reduces the value of each dollar. You can beat inflation by having your savings grow faster than inflation. That could mean putting your money in stable or growth-oriented investments. Always seek the advice of a good financial planner.
- Is your income really fixed?
Sometimes there are ways to increase income. Can you work part-time? Could you hold a yard sale? Do you have collectibles you could sell (antiques, stamps, artwork, etc.)? Are there government benefits you qualify for but have not taken advantage of? Think of ways to earn extra money.