Worrying about your finances isn't great. It’s not great for our mental or physical health. It’s super important for us to think ahead and plan for our future. Why is Budgeting important? It can help you keep your independence, lower financial stress, and make sure that you have enough money to cover your needs (including healthcare expenses like hearing aids, prescription drugs, etc). Let’s learn more about why budgeting is important for everyone, especially older adults on a fixed income, and find some tips on creating a budget and stretching your money.

Why is Budgeting Important?

Budgeting can be useful at any age, but it's especially important for seniors. Budgeting is important because:

Protect Your Financial Independence

It helps you keep your independence. By knowing exactly how much money you have and where it's going, you can make better-informed decisions about your spending. It becomes easier to avoid overspending and ensure that you have enough money to cover your basic needs and allot some extra funds to the things that bring you joy.

Reduces Financial Stress

Financial stress can negatively impact your physical and mental health. By having a budget in place, you can reduce your financial stress and enjoy a more peaceful and fulfilling life knowing your tomorrows are protected.

Helps you plan for the future

By budgeting, you can plan for future expenses, such as healthcare costs, home repairs, and travel. This can help you avoid the blows of unexpected expenses.

Tips on Budgeting

Creating a budget can seem overwhelming, but it doesn't have to be. Here are some tips to help you get started:

Track your expenses

The first step in creating a budget is to track your expenses. This can help you identify where your money is going and where you can cut back. Is Excel good for budgeting? Yes! If you have the software on your computer, you can make a table going over all of your expenses for an average month. This is great for visualizing your budget. It doesn’t have to be a confusing mystery. If you don’t have Excel, there are many great free budget spreadsheet alternatives like Google Sheets or even a notebook!

Determine your income

Next, you'll need to determine your true monthly income. This includes any retirement income, Pension, and other sources of income. Once you know how much you have to work with every month, this will make the next steps a lot easier.

Set goals

Once you know your income and expenses, you can set financial goals. This might include saving for a vacation, paying off debt, or building an emergency fund. Essentially, ask “What is really important to me” or “What is it that I really want to be able to do”. Having a strict budget that covers our expenses is great, but we still have to remember to treat ourselves. It’s important for us to have something to be excited about.

Create a plan

Based on your income, expenses, and goals, create a budget plan. This should include a breakdown of your monthly expenses, such as housing, food, transportation, and healthcare. Once these essential items are covered, then you can create a section within your budget for “savings”. This can be further broken into sections like “Vacation Budget”, “Backyard Renovation Budget”, etc. A great rule to use is the 50/30/20 budget rule. This involves splitting your money into three buckets based on your after-tax income: 50% to needs, 30% to wants and 20% to savings and debt payments.

Stick to your budget

The key to budgeting is sticking to your plan. This might require making some sacrifices, but it's worth it!

Government Programs & Subsidies

Many Canadian non-profit programs like Victoria Lifeline offer subsidies that can help you stretch your dollars even further! For example, Victoria Lifeline offers a subsidy program. If you have any financial concerns about being able to pay for our Lifeline service, you and your loved one may be eligible for our Subsidy Program. A reduced monthly rate is offered to those who qualify. 

Stretching Your Money

If you're on a fixed income, stretching your money is essential. Here are some tips to help you make the most of your budget:

Coupons And Discounts

Stores and restaurants often offer coupons on their products and discounts for seniors.

Shop Sales

Try prioritizing items that are on sale, even if they are not from the brand that you usually buy. More times than not, they're fairly similar.

Consider private label brands

Generic brands are usually less expensive than name-brand products, and they're usually just as good. For example, brands like Compliments and Presidents Choice.

Cut back on unnecessary expenses

Take a look at your expenses and see if you can find areas where you can cut back on your spending. This might include eating out less, cancelling subscriptions you don't use, or maybe even downsizing your home.

Buy in Bulk and FREEZE

Buying in bulk often means you are paying less per item than you would if you just bought them individually. For things you need, this is a no-brainer. This is great for items like non-perishable food items that you can store and enjoy whenever you want. But what about items that aren’t non-perishable? Your freezer is your best friend. By freezing items, you can buy them in bulk and never have to worry about them expiring before you can use them! Waste is one of the most significant hurdles when it comes to buying in bulk. Freezing is the solution!

Budgeting is essential for seniors who want to maintain their independence and avoid financial stress. By tracking expenses, setting goals, and sticking to a plan, you can stretch your money and enjoy a fulfilling and independent life. Remember to consider healthcare expenses, account for fixed expenses, and be flexible when creating a budget.

This article is meant to be informational in nature and should not replace the advice of a trained healthcare professional or financial professional. What works for some individuals, might be harmful to others. Consult a professional before making any significant changes.  

Blog by: Maor Tsitrin, Marketing & Communications Assistant