Retirement Planning Tips For Building a Simple Budget That Lasts Through Market Ups and Downs

How you allocate your savings and investments is crucial for securing your future. Coast Central can assist with creating a plan that balances growth with protection.

Consider categorizing your expenses according to needs, wants, and wishes to better prioritize spending while cutting excess costs. This may help reduce unnecessary expenditure.

An emergency fund can provide much-needed stability during times of market instability and reduce financial stress. Watch our Voya Learn video for tips on creating one.

1. Keep it simple

Beginning a budget can be complex, so for best results it is best to keep things straightforward and straightforward. Focus on tracking spending and creating a savings plan to meet short-term goals.

Start by reviewing your recent credit card or bank statements to assess what your typical monthly expenses are. This allows you to identify fixed costs like rent/mortgage payments, utilities and debt payments as well as variable expenses such as entertainment, dining out and shopping.

Tracking expenses will help you sidestep the trap of lifestyle creep, which occurs when income increases but retirement and/or short-term savings don’t keep pace. Tools like budgeting apps or calendar reminders can help keep you on track and prevent this pitfall; increasing automated savings even just a little each month could take you much closer towards achieving your financial goals.

2. Don’t overdo it

Begin by compiling all of the money you bring in each month, such as tips, overtime pay and bonuses. Next, write down expenses that remain relatively consistent from month to month, such as rent, utilities, food and insurance premiums.

Start by listing variable expenses such as entertainment, shopping and travel. Use credit card and bank statements as a guideline for how much is spent each category on an ongoing basis.

Finally, list long-term savings and debt repayment categories in your budget. Aiming to allocate approximately 20 percent for both categories should give enough savings room to both pay down any outstanding debt as well as save for items such as medical costs or purchasing a new vehicle in retirement. To help make this easier, set up automatic bill payments or savings deductions from paycheck to make sure that savings and repayment of debt remain consistent over time.

3. Don’t be afraid to diversify

Idealistically, retirement should start off debt free. But in reality, two-thirds of retirees carry debt such as mortgage or credit card balances that restrict how they spend their savings.

Determining an approximate annual retirement budget is vitally important; this should cover living costs, healthcare costs and travel or leisure activities. There are a number of online tools to assist with this calculation process.

Consideration should also be given to fixed expenses, including rent/mortgage; utilities; insurance premiums; transportation costs and debt payments (such as student loan and auto loan balances). You might add in an “extras” category for discretionary purchases like dining out or entertainment expenses. Also keep an eye out for potential sources of additional income to supplement your retirement budget such as part-time work, freelancing or monetizing a hobby.

4. Don’t panic

Budgets have long been perceived as restrictive measures that compromise our freedoms or require tedious spreadsheets; but when designed with thoughtful consideration and with the goal of increasing wealth, they can become powerful financial tools.

Start from the basics: Gather and review your last two bank statements to give an accurate picture of your income and expenses. Choose an effective system (notebook, spreadsheet or app) for tracking expenses that fits with your lifestyle – weekly or monthly check-ins will keep your system accurate! Adjustments may need to be made as your life changes but keep progress over perfection in mind!

Prioritize essential expenses and work toward paying down debt. Consider allocating no more than 60% of your take-home pay toward must-haves such as mortgage or rent payments, utilities bills, minimum debt payments and groceries; reserve 30% for nice-to-haves such as automatic savings plans or long-term investment accounts such as traditional or Roth IRAs (if eligible), where compound interest can help expand your savings over time.