Remember the budget advice by Dickens? - "Annual expenditure; sixpence less than annual income - result? - happiness!"

Do you recall the days when you didn't budget much, if at all? You probably had car loans and student loans and later on mortgages and maybe the costs of raising a family.

The big difference in retirement is that you can’t expect your income to increase annually. That’s why it’s often referred to as a time of ‘fixed income’. In fact, your income may decrease sometimes when the markets are being unkind to your investment portfolio.

Some people may dislike the idea of budgeting. The truth is, however, if businesses, schools, hospitals and even countries didn't do it they would probably soon cease to exist.

Old style budget sheet

It has two main goals. One is to track expenditures and the other is to continuously find ways of saving.

It’s important to distinguish between fixed and discretionary expenses. Fixed expenses are usually easier to estimate. They include household costs such as food, utilities and transport.

Discretionary expenses need more careful monitoring. If you golf, for example, record your annual expenditures including meals at the club house. This way you’ll be able to see if next year's paycheck is going to be adequate.

If your investment portfolio is not doing so well one year then you may want to cut back on your discretionary expenses. If they are clearly recorded from the previous year this will make the task easier.

Retirement is a time that fits naturally with the idea of watching expenses. You have more time and opportunity to be creative about saving.

Whatever your level of wealth, it’s very important to do some type of monitoring of your spending.

One of the hardest things to estimate is how long you’ll live. Most financial planners these days assume age ninety.

Unless you have reason to believe otherwise, maybe you should too.

Keeping track of your expenditures can help you ensure that you don’t out-live your money.

Your comments?

Some more great ideas to help you heed Dickens;

Unusual spending habits may be psychological

Discount fees on banking charges for seniors

New rules governing credit cards

Potential US tax consequences for snowbirds

Pension Income Splitting

Managing the urge to splurge

Talk can be cheap with a VoIP telephone line

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