iStock_000024892371SmallIf you’re like most retirees, you live on a fixed budget of some sort. Even those with more generous living allowances still have to plan their retirement account distributions carefully so that their money will last the rest of their lives. Unless you plan on working part-time, it’s often difficult to increase your cash flow coming into the household. But luckily you can follow these four simple steps to make sure your outgoing cash flow remains within your budget:

Get organized. Get all those financial documents out of that cluttered pile and sort through them. Create an organized filing system where you can easily locate the documents you need. Include items such as mortgage information, retirement account statements, records of other assets, receipts for major purchases, and statements for all expenses. Having all information on hand will help you to better understand your financial picture, and make smarter decisions about your money.

Add up your monthly expenses. Compare these with your monthly income in order to determine your budget for extras. Don’t forget items that only come up every few months, such as car insurance or gifts. Set aside part of your monthly budget for items which occur infrequently. At this point you will discover either a shortage or a surplus in your budget.

Identify your goals and order your priorities. Separate needs from wants, and put needs on the top of your priorities list. But remember to factor in wants, at least on an occasional basis! If you discovered a budget shortage in the previous step, look for ways to reduce expenses so that you can cover all of your needs. Remember to include your spouse, if you have one, in this conversation.

Regularly review your goals and priorities. As new expenses occur, such as healthcare costs, you’ll need to review your priorities. Be ready to make adjustments to variable expenditures, such as entertainment, if a more important item needs to take precedence. It’s even better if you can anticipate new expenses before they occur, and make room in your budget before you encounter a problem.

13695 – 2014/9/10