• What to Include in Any Senior Budget

  • by Lauren Russell

When it comes to successful money management, financial professionals seem to be in agreement – one of the most important actions to take is creating a budget. But to have an effective budget, you have to know what to include and how to organize it. We know that everyone’s budget will include different items because no two people have the same lifestyle, financial goals, or needs. For example, some people may be saving for a vacation or retirement, while others are working on paying off debt or spending money gassing up their boats every weekend. However, there are some items that every budget should have.

To better determine what to include in your budget, you’ll first want to list a few categories. While it can be hard to pick the categories, we suggest starting out with thinking of those things you need to live. These include basic needs for survival – for example, food and shelter.  To help you start out, we’re providing some of the most important categories and items to include in your budget.

Budget Category: Shelter

Whether you own your home free and clear, still pay a mortgage or rent, there are a few costs that come with living somewhere. Here are a few items that may require payments:

  • Mortgage or Rent
  • Homeowners or renter’s insurance
  • Property Taxes
  • HOA Fees
  • Necessary or major home improvements (new roof, plumbing repair, furnace replacement)

If you’re looking to eliminate your monthly mortgage payment, a reverse mortgage can help. With this loan, you are not required to make a monthly mortgage payment. You are still responsible for paying your property taxes, homeowners insurance, and home maintenance costs, so keep those in your budget!

Budget Category: Utilities

A shelter is of no good use without these important utilities:

  • Gas (heat, cooking, water heater, etc.)
  • Electricity (lights, cooking, air conditioning, etc.)
  • Water
  • Phone (home or mobile)
  • Garbage collection and recycling
  • Intenet. While this may not be a “need,” it is becoming more of a necessity.
  • Cable (not necessarily a “need”)

Budget Category: Home Maintenance

Home maintenance prevents small problems from becoming bigger and provides a safe and comfortable living environment.

  • Cleaning supplies
  • Small home repairs and improvements
  • Hired work – cleaning services, lawn maintenance, snow removal, repair services
  • Tools

Budget Category: Pet Expenses

Your furry friends have needs too. Don’t forget them when you’re budgeting.

  • Vet bills/costs
  • Pet food
  • Toys and accessories

Budget Category: Food

You can’t avoid this category – you need food and water to live. There are a few ways to cut costs in these categories. Find the best deals, typically announced in the ads section of the newspapers. Cut coupons. Shop generic. Enjoy senior discounts or Early Bird specialists at a number of restaurants. Host a potluck with friends. Get creative!

  • Groceries
  • Dining out (fast food, restaurants, coffee runs, etc.)
  • Food for pets

Budget Category: Transportation

Until teleportation is invented, you’ll need a way to get around. Don’t forget to include these costs, depending on where you live and your method of transportation.

  • Car payment
  • Car Insurance
  • Gas money
  • Parking
  • Car repair fund
  • Oil changes and other maintenance
  • DMV fees (license renewal and annual license plate tab renewals)
  • Public transportation passes (bus, subway, trolley, etc.)
  • Other modes of transportation. This could be costs associated with bike, scooter, or boat, but only if you use these for transportation and not recreation purposes.

Budget Category: Self Care

You don’t need to go into full-on pamper mode, but you do need to take care of yourself and practice good hygiene. Make sure to include these costs:

  • Toiletries (shampoo, soap, toothpaste, toothbrush, hairbrush, etc.)
  • Toilet paper
  • Grooming services (haircuts, manicures, etc.)
  • Clothing
  • Gym membership (not necessarily a “need”)
  • Laundry detergent
  • Dry cleaning
  • Vitamins/supplements

Budget Category: Medical

Your health is important, and prevention care becomes more imperative as you get older. Make sure you can cover these costs:

  • Doctor visits
  • Dental checkups, cleanings, and other services
  • Hired home medical care
  • Eye exams
  • Physical therapy
  • Emotional therapy and other mental health services
  • Medications and medical devices
  • Emergency medical care
  • Medical bills

Budget Category: Savings

This doesn’t include saving for a luxury item or vacation – those belong in the fun category! These are the kinds of savings you need.

  • Emergency fund. It’s smart to have 3-6 months of your basic expenses saved up.
  • Retirement. If you’re still working, this is a very important fund to contribute to.

A reverse mortgage line of credit is the perfect financial tool for this category. You have access to funds when you need them. It’s could be the perfect safety net for unexpected expenses in the future. Keep your other assets untouched as they grow in value – and avoid withdrawal penalties – by using the line of credit instead when you need funds. Plus, any unused money in your line will grow in value over time.

Budget Category: Debt Repayment

Paying off or consolidating debts could free up more money to use each month. You should be making minimum payments on all of your debts to keep debt collectors and legal folks away. Some examples of debt include:

  • Credit card debt
  • Medical bills
  • Student loans
  • Personal loans

Did you know you can use a reverse mortgage to consolidate your debts? By doing this, you could choose to make one payment on the reverse only or you could choose to not make a monthly reverse mortgage payment. This could provide you cash flow savings each month. Just don’t forget to pay your property taxes, homeowners insurance, and home maintenance costs.

Budget Category: Giving

You know how important money can be to those in need. If you can’t give any funds, think about donating your time. Don’t forget occasions that may also require actual gifts. If you would like to include giving in your budget, consider these items:

  • Tithing
  • Charitable donations
  • Gifts (weddings, birthdays, holidays, other special occasions)

Budget Category: Fun Money

Just because you’re on a budget, that doesn’t mean you can’t enjoy your life. Just make sure you have enough money to do so by planning ahead.

  • Entertainment/outings (movies, concerts, sporting events, theater shows, etc.)
  • Travel/vacations
  • Subscriptions
  • Craft supplies and other hobby costs
  • Luxury purchases or “spoil yourself” purchases (such non-necessities as iPad, kindles, accessories like purses, jewelry, shoes, etc.)

When it comes to meeting your financial needs or successfully hitting your financial goals, having a budget is an important part of any financial plan. As you can see, a reverse mortgage could also be a valuable tool to add to that plan. We offer a few reverse mortgage options to suit you. We also recommend speaking to a financial advisor, who can offer tips and advice based on your lifestyle and needs.