This tool may not seem all that inspired. However, it can make a big difference in your retirement planning: a budget. Start with a blank piece of paper, or a blank spreadsheet, if you wish to use your computer. Go through your checkbook, bank statement, and credit card statement, then write down all of your monthly expenses, including your utilities, credit cards, eating out, groceries, and snacks.
The negative ‘future’ budget was scary but even more frightening was the very fact that, even though we used our current expenses, our predicted Social Security income was not sufficient to cover our monthly expenses. We subtracted our mortgage payment, anticipating that we will get that paid in full before retirement, and subtracted our car payments to determine if that would make a difference. Taking those expenses out of our future retirement budget left us a couple hundred dollars each month. However, as my husband pointed out, our home and vehicle expenses would increase because we would be paying to maintain older vehicles and an older home– there goes my extra $200 a month.
Write down every single thing that you spent money on, even though it was just for fun. Now, at the lower part of the page, subtract the amount shown in your total take-home income. Anything that is left over is potential for retirement funds.
If you do not have anything left over, then it may be time to rethink your budget. Cut back on the little things so that you will be able to plan for the great thing, retirement.