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/expenses. It is a process that we all begin soon after we earn our first spending money. BUDGET, simply put is a plan expressed in financial terms. Budgeting for Retirement Everyone wants to know how much money is needed in retirement. The biggest factor to consider is how long you will live and no one can predict that with reasonably certainty. The whole idea of budgeti ng however in this context is to accumulate enough money for monthly and annual retirement spending for when you finally stop working. Retirement Budgeting: Who s Responsibility? It is responsibility of the retiree to do his/her retirement budget. Do not leave it in the hands of pension administrators, custodians, consultants or even the government. If you follow the news and history of pensioners in this country, you will know and agree that pensions payment has been a very big issue with a little improvement emanating from the new pension reform act, a little feat has been achieved but there is still more to be done. We can no longer depend on the retirement plans promises by companies and governments for their employees. Do yourself a favour; create your own savings vehicles via budgeting and take responsibility for planning your own retirement. If the governments or companies that you have worked for pay you promptly, consider it a bonus. Questions to ask while budgeting: The following questions must be answered: 1. Does your money control you? 2. Do you ever wonder why you come up short before your salary or pension? Or know why, but still come up short? 3. Do you ever see a really good bargain on something you need, but do not have the money to pay for it at the right time? 4. Do you put money in your pocket and allow it to just disappear little by little over a few days Money has one of its characteristics of being relatively scarce and it is really impossible to handle your money well unless you know where and why you are using it. That is the first step; regardless of how well you thing you need to have a budget.
You will be surprised at some of the foolish spending you are doing. and so on and multiply by 12 for a yearly total. Gather up all your cheque. medical. Variance Analysis After you have listed your fixed and variable expenses along with your income. Subtract your total expenses from your yearly take home pay. When your expenses are more than your income. Budgets are like life stories ongoing projects. such as utilities (electricity. school fees payment. Some expenses li ke insurance premium usually occur annually. What is the amount after your deductions? Does this figure scare you? Is it a negative number? If so. you now need to make a plan. you have extra and you buy a car. clothing. you need to track your spending to see where you can cut down. 4. and waste disposal). entertaining visitors to rent payments. you may find it hard to know how much you will need monthly and find yourself putting money in savings. Involve your entire family in your budget plans since budgeting will affect each family member. 2.If you do not have a budget. your need to make some adjustments. chewing gum. bills. incomes go up or down. and cheque stubs for the last year. Steps in Pre and Post Family Budgeting The basic problem in budgeting is: How to easily make a flexible budget that suits your individual circumstances? The answer to al budgets lies in calculating your personal income and your personal expenses first. and so on and multiply by 12 for a yearly total. List your variable expenses each month. water. Write down everything from biscuit. Find out where you can cut back. List your fixed expenses that occur each month. such as rent/mortgage payment. receipts. so a budget that can be adjusted easily is important. Here are some hints to help you start your pre and post family budget and stick to it: 1. 3. The best way to do this is to write down what you spend for one month. 5. taking money from savings or simply doing without things you need until next pay day or inflow. You might need to do something as minor as earning 2 . you move and the new rent costs more. Things change.
2. Your retirement plan whether pre or post. a budget makes good sense. Whether you are just getting started in the employment world or are earning retirement age. 3 . Sticking to a budget requires a lot of discipline but is well worth the effort. Pre & Post Budgeting Goals One of the most useful things you can do for your retirement planning is to start and stick to a budget. 4. is dependent upon your ability to budget and save for your later years. Starting a budget is easy. The sooner you start. overspending or even overtrading if you are in business. 3. less visitors entertainment or as major as cons olidating some of your bills. Right now. To help you stick to your budget. you are probably saying you do not have time for budgeting or a budget is useless since you do not have enough money to make ends meet. Sticking to a budget is as hard as sticking to any change that affects your lifestyle. just vow to do better in the future. An occasional slip would not jeopard ize your efforts but continual deviations from your plan could cause you to become further in debt than you can afford.out less often. Record everything you spend and cut out items that are not necessary Make every effort to quit bad habits such as smoking and alcohol Treat yourself once in a while with the money you have saved Do not beat yourself up if you slip. everyone should make time for budgeting. the more you will accumulate. What it takes to Succeed Sticking to your budget can be a complicated effort in self -control. If you are one of the retirees who have too much left at the end of the each month. Some ways to help you stick to your budget are: 1. sticking to it is the difficult part. It is much like any other change you make in your life and you need discipline to pull it off. you need the cooperation of your entire family and you need to live within your means. For a secure financial future. a budget is a necessity. No one says it will be easy but the rewards are worth it.
The plan helps you take charge of your spending on a daily. Spend Wisely Understand that you should be thinking before buying unnecessarily. After determining the revenue portion. Thing of your budget goals as your financial wish list and your spending plan as a way to make those wishes a reality. 4 . First. but it also gives you a sense of control. 3. Your spending plan not only puts you in charge of how your money is being spent on a weekly. Think of your spending plan as a road map that helps you reach your goals. at least 5% to 10% of your take home pay. If you eliminate some of these spending wastes. you should look into your expenses. as well as give you a sense of direction. Developing a Spending Plan 1. Keep in mind that a budget is an expression of your goals. You need to designate a specific amount towards decreasing your debts. The more money you stand to lose. The best time to start your budgeting is now. monthly. get control of your purchases 2. The step to this is very simple: 1. The longer you procrastinate. and yearly basis. lots of people are fooling around town in chauffer driven cars when they cannot really pay the maintenance cost. and monthly basis so that you can channel your limited income to achieve your goals. Next. you will have more for the things y ou really need. your financial life may remain in disarray. 2.Some of the basics of starting a budget are very easy. Your spending plan is your practical tool to help you achieve financial goals 2. 4. This is where the budget comes in. you need to treat saving as a bill and put back a set amount. Reduce your debt. weekly. each month. Without clear budget goals. For instance. you have to think about what you are spending money on. Setting and Prioritizing Your Budget Goals 1. why would you buy an expensive jeep vehicle if you do not live in the tropics or tough terrain? Why would you buy a heavy-duty Leister generating plant if you live in an estate where there is provision for a serviced generating plant? Why would you buy an expensive sleeping gown just to sleep in the night? It is not funny. 3.
you should spend some time considering and setting your personal financial goals as discussed earlier. iii. Setting Investment Goals Before you actually invest your money. here are some tips to avoid common mistakes 1. It involves selecting an investment portfolio that will meet your personal investment goals. For example. Before you actually invest your money. investment planning during retirement is not the same with investing for retirement. car. Use Of Cash Flow Analysis In Creating Your Budget Developing an Investment plan 1. How To Cut Costs If You re Spending Too Much 2. boat. 5 ii. Which means that an effective investment planning during retirement. should start with clearly defining your investment goals. Without a definite time frame. Investing For Large Purchases: There are times in your life when you may want to create an investment portfolio to save for a large purchase such as a house.Implementing and Monitoring Your Spending Plan Once you have identified your budget goals and create a spending plan to meet them. needs. Cash Flow Analysis 4. you should spend some time considering and setting your personal financial goals. . There are many different scenarios in life when you want to set up an investment portfolio to save for a large purchase. risk tolerance. or other expensive items. you know as you create the portfolio when you will need the money. Before you begin. Generating Current Income: There are times when you might want to set up an investment portfolio to generate current income. How To Increase Household Cash Flow 3. it may be more difficult to choose investments for your portfolio. you may be retired (or near retirement) and need additional income to supplement the amount you receive from gratuity and your pension plan. you may need to consider such issues as time horizons. In doing this. Increasing Your Net Worth: With such time-dependent goals. and investing for educating goals. you are ready to put your plan into action. investing for retirement. like personal financial planning. Examples of investment goals include: i. No doubts.
Investing For Education: As with other investment strategies. vi. v. the types of investments you want to make will depend. short-term needs. energy and income efficiently in ways conducive to wealth building y Financial independence is more important than displaying high social status y Parents didn¶t provide economic outpatient care y Adult children are economically self -sufficient y Proficient in targeting market opportunities y Choose the right occupation or business 6 . Food for Thought 1. in part. Sometimes. y y y y y Money Mis-use Problems 90% of crimes are committed for money 89% of divorces relate to money problems 80% of families live from pay cheque to pay cheque Most people have insufficient money for retirement Most stress people suffer from is directly or indirectly related to concerns for money y Money problems usually result in lower self-esteem 2. Cash Reserve (Overview): A cash reserve is a pool of funds (and sometimes credit) that you hold in a readily available form to meet emergency and other highly urgent. the amount of time until you need the money (your investment horizon) will influence which investments will make up your portfolio. it is referred to as emergency or contingency fund. Seven Habits of the Millionaire Next Door y They live below their means y They allocate their time. on when you start your investment portfolio. Investing For Retirement: If you are creating an investment portfolio for your retirement.iv.