Tips For Living Effectively on a Fixed Income

Everyone’s financial situation is different. Making expenses without a financial plan can lead to financial ruin. Financial plans work when individuals make choices that they are willing to put into action. By making the right choices, you create a financial plan that work best for you.

What are Your Wants, Wishes, and Needs?

Knowing what we truly want is not an easy task. It is helpful to know that people have found it takes some thought to answer this question in a meaningful way. A major factor in getting what you want is knowing the difference between what needs and wants are.

More money is not always an instant cure. Wishing for money does not make it exist. When we allow money to control us, conflict and uncertainty increase. We need to be realistic in all our expectations.

It is very important to learn to recognize the difference between needs and wants. A need is something you cannot live without, such as food, clothing, and shelter. A want is something you would really like to have, but you could substitute it for something else.

Thoughtful planning is the key. Planning what you want and how to get there helps you to be in charge of your own financial situation. Knowing what you want can reduce some of life’s stress and provide you with a sense of security.

What You Have

Be aware of what you have. Having more things is not necessarily better. Do you need the things you have? Does having these things cause you to spend more money for upkeep?

Take an honest look at your current income, investments, and savings. Do you have an emergency fund? Know how much money you have and where your money goes.

Where Your Money Goes

Write down every item purchased and the amount spent. Keeping a record of exactly what is spent can help you to know exactly where your money goes. Then you can consider possible options.

Be sure to track fixed, flexible, and occasional expenses. Fixed expenses are costs that are the same each month. Flexible expenses are costs that vary. Occasional expenses are quarterly, yearly, seasonal, planned, and unplanned costs.

Your Action Plan

Compare money available and money spent. Set priorities for spending. Know your limits and adjust your spending. Seek creative solutions. Then put your plan in writing.

Setting short-term and long-term goals gives your plan purpose. Rethink your current buying habits. Do you buy because you have a need? Do you shop because you might find something to buy?

Remember it is okay to say no. If you are barely able to pay for minimum necessities, saying no to things you would like, but do not need, can be helpful. You may be able to think of other choices. Having a financial plan may help you say no when it is necessary.

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