How Retirement Budgeting Impacts Your Finances (In A Good Way!)


Retirement budgeting is like eating healthy, you know it’s good for you and you need to do it but you don’t always want to. In the short-term, it is easier not to budget, just like in the short-term it is easier not to eat healthy, but the long-term consequences will make themselves known over time. 

As financial planners, we talk about budgeting a lot because of the big impact it can make in people’s lives. Being consistent with your budget is a habit that forms over time and can transform the way you approach your financial life. 

Budgeting may sound good to you but many people find it hard to put it into practice. Today, we would like to show you how an intentional budget can change your finances for the better. 

1. Understand the scope of your finances

One of the reasons why finances can seem overwhelming or stressful is because of the many moving pieces. From bills to debts to savings to goals, it is hard to know where to start and how to get it all organized. That is where a budget can come in. 

Your budget will help you understand the full scope of your finances by detailing how much money you spend (and save) per month. In your budget, it is important that you factor in your savings as well as your spending. This can help show you monthly progress toward saving goals and keep you motivated to save. 

Budgeting can also reveal places in your life where you are overspending. Did you really spend $100 this month on subscriptions? How did going out to eat end up costing $300? Visualizing your expenses is another great way to show you areas where you can improve. Perhaps you decide to make one additional meal at home per week or cancel any unused subscriptions. This saved money can then be contributed to your retirement fund, your grandchild’s 529 accounts, or your entertainment budget for the month

Clearly visualizing and comprehending where your money is going will help you be more secure and stable in your financial life. A budget can offer transparence and take the guesswork out of your finances. 

2. Set short-term and long-term financial goals

Budgets can help you organize your expenses, but they can also aid in setting both short-term and long-term financial goals. Your financial goals are the things you want to work toward: a wedding, house, vacation, or retirement for a few examples. But those goals often have very different timelines. Your goal to go on a vacation is a short-term goal whereas saving for retirement is a long-term goal. 

Spelling out these goals in your budget is an excellent way to ensure that you are making progress toward them each month. In order for your budget to work, it needs to be built with your financial goal in mind. A generic budget isn’t going to be something you will stick with because it isn’t personal to you and your needs. But when you let your budget reflect your financial goals, you are ensuring that you are not only making ends meet each month but that your money has an intention, purpose, and momentum behind it. 

3. Customize your spending and saving to your values

Going a step deeper than your financial goals, your budget should also reflect your values and priorities. What are the things that are most important to you? Perhaps it is giving to charity or your favorite yoga studio. Whatever it is for you, make sure that you include these things in your budget. When you do this, you are creating an intentional budget that promotes both intentional spending and saving. 

4. Keeps you accountable

Many people have problems with overspending. By creating a strong budget, you will be able to hold yourself accountable for your spending habits. When you see your spending on paper, it is easier to internalize a misstep and come up with a solution. 

Make sure that you are flexible with yourself. There will be some months where you spend more. If that is the case, don’t beat yourself up about it. Just make sure that you understand your spending patterns and how you can adjust them to reflect your goals, values, and priorities. 

5. Helps you prepare for emergencies

Emergencies happen to everyone. Just last week, my car wouldn’t start and I had to replace the battery. While a relatively inexpensive fix, it was still an unexpected cost. Budgeting for emergencies by creating a separate emergency fund can help you stay prepared when something happens. 

It is important to keep 3-6 months worth of living expenses in an emergency fund at all times to cover you in case of a medical expense, loss of a job, or an unexpected repair. 

Budgets are an excellent tool for your financial life. They help you stay organized and can give you more control over your financial destiny. Making and sticking with a budget isn’t always easy, but by incorporating your goals, values, and priorities into your budget you will make it personal and unique to you. 

Are you ready to revamp your budget? Give us a call and we would love to help you create a budget you will actually want to stick to. 

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