Spend Less: You May Find
You Enjoy Your Money More

Say the word "budget" to many people, and they conjure up the financial equivalent of a crash diet: a strict plan characterized by abstinence, restrictions and deprivation. In truth, a smart budget can help you get more enjoyment from the money you have.

Once you gain a clear understanding of your current finances and outline steps to reach your retirement and other savings goals, you can make informed choices about how to spend your money. So, instead of having the constant nagging feeling that you're not saving enough, you'll have a concrete plan and a way to measure your progress. And that means you'll worry less and enjoy more.

How Much Do You Actually Spend Each Month?

Chances are, you underestimate how much you spend in an average month. In addition to fixed costs like a mortgage or car payment, you probably have other, easily overlooked expenses that really add up.

One way to get an accurate picture of your monthly expenditures is to look at your past behavior. Bank statements, cancelled checks, ATM slips. . . your financial records hold the key to coming up with a realistic figure. Be as detailed as you can, and don't leave anything out. This is the time to get down on paper how much you actually spend - not how much you think you should.

How Much Do You Make in a Month?

Once you know how much money is going out, determine how much you have coming in. Include any rental income, gifts, stock dividends, etc., as well as your monthly salary after taxes.

Now, when you subtract what you spend from what you earn, where does that leave you? Whether you can meet all your savings goals without adjusting your spending patterns, or have just realized that you spend more than you earn, you now have the information you need to gain greater control of your finances.

Is It Time for a Second Job or Just a Second Look?

Compare your disposable income against your monthly savings goals. And if you come up short, (like most of us) you don't have to start looking for a second job, although increasing your income is certainly an option.

Another option is to take a second look at your spending patterns. First, notice all the different categories your spending falls into, from eating out, to hobbies and home improvements. Now, start looking for ways to trim back your spending in each area - whether it's by $10, $20 or $100 a month.

It is important to be realistic and honest with yourself in this process. If you love to dine out, and do so 3-4 times a week, deciding to take your lunch to work everyday and have dinner at home every night will almost certainly make you feel deprived and set you up to fail.

Instead, set a realistic amount to trim from your dining-out budget, and get creative about how to do it. If it's the social part of eating out you love, choose less expensive restaurants. Or if you're a devoted gourmand, eat at home one more night per week than you do now, then trim back more on another spending category that's important to you.

How Do You Stick With Your Well-Planned Budget?

Nothing will keep you more motivated than watching your own progress. So sit down regularly to evaluate the month just ended and to plan for the one ahead.

Also, be sure to adjust your budget regularly as your income and expenses change. For instance, around the holidays you'll probably want to earmark a larger sum for gift giving. Or, when you pay off your car loan, you'll want to decide where you would like to put that extra income.

And of course, your budget needs will change as you move closer toward, or further along in your retirement. If you'll be working for another 20 years, a budget can help you accumulate significant savings. And once you've retired, a budget can help alleviate the worry of outliving your retirement income.

Any way you look at it, a budget is an effective way to gain more control and worry less over money. So stop depriving yourself of financial peace of mind. Start a budget.

This article is provided for general information, and does not reflect the advice or opinion of Fleet.

What’s Standing Between You 
and a Long, Happy Retirement?

So, you've calculated how much income you'll need for a long, happy, secure retirement.

And you've calculated how much income you can count on from Social Security, your pension and your current savings.

And you've noticed that between these two figures is a sizeable gap - otherwise known as a "projected income shortfall."

Your best course of action depends on several factors, including just how short of your actual income needs you're falling, how long before you retire and how many years you expect to spend in retirement. With those factors in mind, explore your options for closing the gap between your retirement income and your expenses.

Save More for Retirement Every Month

If you still have a long way to go before you retire, saving even a few dollars more every month can make a big difference in the long run. First, take a good look at your expenses and find ways to trim spending and save more.

Also, if you have children, you may need to adjust your college savings plan in light of your retirement needs. First, don't put off saving for your own retirement until your children are out of college, or you'll deprive yourself of years of tax-deferred growth. Second, consider a state university or a small liberal arts college where your child can get a quality education for a fraction of the tuition of a private school. And third, have your child share in the cost of his or her own education by taking out student loans.

Make Your Money Work for Maximum Growth

Be sure to take advantage of an IRA or other tax-deferred plan so your retirement savings will grow over time. Also, if you're still at least 10-15 years away from retiring, don't rely on fixed-income investments. Stocks and other long-term investments may fluctuate more, but can provide you with far greater returns in the long run.

Plan to Work Longer

One effective way to preserve your savings is to put off using them. Deciding to stay in the workforce a little bit longer might be the best way to ensure a secure, comfortable retirement. This is especially true if, as you continue to work, you manage to decrease your expenses and save more toward retirement.

Even if you do not want to stay in your current job or profession, you can consider part-time work or freelance consulting. Employment will allow you to put off taking Social Security benefits and retirement distributions that will help your income last longer. However, be sure to talk to a financial professional about the tax implications of continuing to work.

Revise Your Retirement Dream

If you're closing in on retirement, you may find that there's simply no way you're going to have the amount of income you would need to meet your projected expenses. Then it's time to start looking for ways to decrease your expenses without decreasing your overall quality of life.

A good way to begin is to identify what is most important to you for a comfortable retirement. Take a look at the following list and rate each retirement goal on a scale of 1-5, where 1=Unimportant and 5=Very Important.

Now, go back and look at those items that you ranked between 1 and 3 and think of ways to scale back your spending in those areas. This will help you close up the gap between your projected income and expenses, while leaving the most important aspects of your retirement dreams intact.

This article is provided for general information, and does not reflect the advice or opinion of Fleet.

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