Budgeting in retirement

Terron

DT2001 wrote: »

I thought budgeting was a financial plan for say 6 - 12 months.
Terron in post 49 IMO budgets because he adjusts his spending to his bank balance.

Those two statements contradict each other. I do not make a plan for my personnal finances. So if budgetting is a financial plan I do not budget.

I check my bank balance at least once a month. I check I have enough to pay off my credit card. If the balance is low then I spend less For eaxample I am less likely to go out for a meal just because I feel like it.
In the past I did this by adjusting how much money I would take out of the bank each week and only spending that. Now I mostly use cards but I still switch between I should be saving money so should only buy th essentials and I have enough to treat myself.
Th. The only things I have to plan for are once that would cost more than a months normal spend, as my default is not to make such purchases, even when I can afford them.

DT2001

Terron wrote: »

Those two statements contradict each other. I do not make a plan for my personnal finances. So if budgetting is a financial plan I do not budget.

I check my bank balance at least once a month. I check I have enough to pay off my credit card. If the balance is low then I spend less For eaxample I am less likely to go out for a meal just because I feel like it.

Surely checking your bank balance and if too low, spending less is a plan. You plan to spend within your income BUT do not monitor/analyse it via a spreadsheet.

To budget OED - the fact of being careful about the amount of money you spend;

My point maybe poorly made is that most of us budget without a lot of thought or using spreadsheets and possibly to our detriment.

fred246

My monthly budget is no more complicated than direct debits £500 a month, credit cards £2k a month. My long term budget though is much more complicated covering the 17 year period from when I retired at 50 to state pension at 67. My spending gradually reduces and my pension income gradually increases. So I retired with a big budget deficit. Without spreadsheets I would probably have just said "wait until the kids have left university and then retire". I was so excited when I saw Visicalc in the early 1980s. I knew it would come in handy one day.

Nebulous2

I'm in the run up to retirement and I don't really budget - as many of you would understand it. I have a spreadsheet with a cash balance that I complete on the 1st of every month to keep a track of my net balance.

I'm unlikely to increase my income much by retirement, so what I do is keep good control of outgoings - renegotiate my utilities, check my insurance costs, sim-only for phone. We don't buy many clothes, don't eat out a great deal and when we do it isn't expensive restaurants.

We spend a lot more now than we will in retirement because we're running two houses and will be down to one when we do retire. We're also getting predictable big expenses out of the way before we stop, so we'll enter retirement with a better vehicle, better caravan and a newer boiler than we would have done if we weren't building up resources.

While I dont buy a lot of clothes, I've quite an active lifestyle and some of my gear is quite expensive, so I've been toying with the idea of also buying new boots, new waterproof jacket and new waterproof trainers pre-retirement.

cns06

I drew up my first realistic budget at the start of this year after doing a 3 month spending analysis last summer. (which also identified some major areas we could improve)

It came out around £17k PA. This included 1 car, some light entertainment and hobbies.

Then any holidays and one off big purchases will be added on top.

I added £6k for 2 holidays and £2k for one off spending, electricals, major car / house repairs and the like. This gets me to £25k. Its actually a bit over what I was expecting, I was hoping for closer to 20k, but the cost of travel is probably the big unknown as once we are able to travel off peak and perhaps take the cheapest routes it might be less than what we expect but for now we continue to save and I have bumped our target up a little to bring us closer to £25k.

eumaeus

Have always budgeted and have a story of annual spreadsheets going back to 1990.

I agree that once in "steady state" it can be easy to rely on the monthly bank balance keeping you in check. However (1) with a budget you can check on the inflation of each cost and have a friendly word with the provider to negotiate a better price. E.g. car insurance this year they tried to add on 10% so I complained and they reduced to 0%.

And (2) for the "lumpy" and variable items like holidays and maintenance/building expenses it helps to plan in advance. Budget all the relatively fixed expenses then what's left over is what you can spend on painting the sills, or going away. We paid a year in advance for our holiday and got 10% off.

Terron

DT2001 wrote: »

Surely checking your bank balance and if too low, spending less is a plan. You plan to spend within your income BUT do not monitor/analyse it via a spreadsheet.

To budget OED - the fact of being careful about the amount of money you spend;

My point maybe poorly made is that most of us budget with a lot of thought or using spreadsheets and possibly to our detriment.

I don't plan ahead. I just soend less when I have less, the decisions being made in the moment. I am not "careful about the amount of money" I spend. When I go shopping I don't add up how much it will cost. I just avoid the more expensive things if I was low the last time I checked, I have developed habits that allows me not to spend more than I earn without havinf to think much about the actual money. Only for exceptional items like a holiday do I think about the cost,


Basically I don't like budgetting so I avoid it. I see planning how much I am going to spend or keeping a detailled track as an unpleasant, unnecessary waste of time.I couldn't tell you how much I spent at Tesco's earlier this afternoon without looking it up.


I know other people do things differently and that is fine if it works for them. My way works for me, and worked even when I was on JSA.

badmemory

Well I have never had enough money that I felt I had no need to plan a budget. Does anybody actually like budgeting? Surely it is just something we need to do to avoid paying the greedy banks even more of our hard earned cash. I have a friend who doesn't budget & his overdraft & charges are enough to make your eyes water.


Budget so you have equal spends for every month & life is so much easier. Don't budget & spend a couple of months living on yellow stickered!

michaels

badmemory wrote: »

Well I have never had enough money that I felt I had no need to plan a budget. Does anybody actually like budgeting? Surely it is just something we need to do to avoid paying the greedy banks even more of our hard earned cash. I have a friend who doesn't budget & his overdraft & charges are enough to make your eyes water.


Budget so you have equal spends for every month & life is so much easier. Don't budget & spend a couple of months living on yellow stickered!

I agree, the thought of just spending my income every month fills me with horror. Where are the savings for the unexpected? What about sickness, unemployment or and unexpected expenditure? Adjusting your spend every month to match a potentially wildly fluctuating income and expenditure sounds crazy. Suppose each month you spend £1500 and then one month the boiler broke costing £1500 - presumably all other spending on food, utilities etc would be reduced to zero that month to meet the matching spending and earning goal?!

fred246

Spreadsheets accidentally became sport for me. When we moved into our current house we were paying £1500 in INTEREST every month on the mortgage. Whenever I made an overpayment it went down. When interest rates dropped I could get a higher rate on savings than I was paying on the mortgage. I discovered that lenders would give me a small fortune on 0% credit cards for 2 years or more. So I stopped overpaying and started saving at the highest rates possible and borrowing as much as I could at 0%. Soon even though I was in overall debt the banks were giving me money every month. I don't think I would have done it without that spreadsheet giving me a figure for my monthly interest payment/earnings.