Let’s be honest—budgeting is not fun. If you don’t enjoy it at all, I get it. I understand that you’ve worked very hard for the money you have and you want to have the freedom to buy whatever you want whenever you want without limiting or restricting yourself in any way. 

In spite of that, it’s very important to budget. If you’re one of those people who enjoys budgeting and likes to break down everything, we have a retirement kit designed to do just that. It’s a beautiful tool we’ve designed to ensure that you can narrow down all of your expenses and calculate exactly what you need for your retirement. Just reach out to us and we’d be happy to supply you with one. 

If you hate budgeting, I have a solution for you. Take a piece of paper and draw a line down the middle. On one side, write down all of your discretionary expenses. On the other side, write down all of your necessary expenses. 

The discretionary side should include expenses like traveling, going out to eat, entertainment, etc. If you don’t get to do them, your life won’t be over, but your quality of living might lessen to an extent. The necessary side should include expenses like food, insurance, medication, property taxes, etc. These are expenses you have to have every single month or at least once a year, and there’s no escaping them. 

“Knowing your necessary and discretionary expenses are is crucial.”

The point of this exercise is to help you reduce stress. When people voice concerns about running out of money, what they’re really saying is they’re not sure if their investments are enough to support the lifestyle they prefer and their day-to-day necessities. The goal of breaking things down between discretionary and necessity is to figure out if you have enough income to support your necessary expenses. 

If you receive social security, have a pension, or have some real estate income and that income is enough to cover your necessary expenses, that gives you a lot more freedom and less stress over how your investments are doing because the only thing that’s getting affected by how well those investments are doing are those discretionary expenses. 

If, on the other hand, you have very little income and your expenses are much greater and you’ll need a lot more of your investments to support your necessary expenses, things get a little dicier. You have to be very careful not to suffer sequence of return loss. I discussed this subject in a previous post which you can view by clicking here

If you have any questions about budgeting, don’t hesitate to get in touch with us. We’d be happy to help.