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Tips for Living on a Fixed Income

Budgeting on a Fixed Income

If you are retired or otherwise out of work, you’re likely living on a fixed income. This means you receive funds each month, typically from the government and in a set amount. This can be Social Security benefits, a pension, or unemployment payments. People of all ages live on fixed incomes. Still, older populations are more likely to have this type of financial source, and they have their own unique challenges to budgeting with limited resources.

If you’re having trouble living on a fixed income or transitioning into that type of lifestyle, there are certain things you can do to alleviate some of the pressure. Below, we’ve outlined five tips for living on a fixed income geared specifically toward seniors. And, while it’s important to cut unnecessary costs, you should never get rid of your medical alert system.

  • Create a budget This one seems obvious, but few people with this type of income take the time to do it. For one month, keep track of every dollar you spend – from grocery trips and utility bills to sending that $20 bill to your grandson for his birthday. Then, organize these costs in a way that makes sense to you. Add them up. If you’re spending more than what you bring in every month, you’ll need to cut a few costs. The National Council on Aging has a helpful toolkit to help you start this process.
  • Manage your subscriptions Recurring payments, like those for utilities, magazines, and television streaming services, can add up over time. In most cases, users agree to pay a monthly fee, which is then automatically billed. Review your subscriptions and see which you use least often. By cutting these, you can free up hundreds or thousands of dollars each year.
  • Don’t cut essential service While you will want to cut services you don’t regularly use, consider the implications of living without them. Sure, if you’re not watching much television, the Netflix subscription won’t be necessary. But some recurring expenses, like a medical alert system, are designed for safety. You should always include them in your budget, even if you don’t use them. Having an emergency protocol in place, like that provided with a medical alert system, is important for maintaining physical independence and safety.
  • Don’t add new debt Debt is difficult to pay off when you’re working a job, but it’s even harder to do on a fixed income. If you find yourself overspending with credit cards, consider switching to debit options. This will limit the funds available for a specific purpose and prevent you from unnecessarily borrowing credit.
  • Reassess your transportation costs – Transportation can be a big problem for older folks. On one hand, you likely need access to a car. Walking becomes harder as your body ages, causing you to rely on vehicular transportation. On the other hand, cars are extremely expensive, even if you don’t use them regularly. If you’re looking for ways to save money, consider shifting to public transportation use or leasing a car for short periods of time rather than owning one.