Skip to main content

5 Reasons Every Boomer Should Stick to a Budget

By U.S. News & World Report

Americans are notoriously poor savers. According to a 2014 Bankrate survey of about 1,000 U.S. adults, 60 percent of Americans could not afford to pay for most unexpected expenses. If you’re in retirement or close to retirement, this could be a big problem. But there is a way boomers can be better prepared: become better at budgeting.

A budget brings your expenses in line with your income. It helps you control your financial future and fund your retirement activities. Fortunately, there are many budgeting tips and tricks to make it easier. For example, in your monthly bank statement, you can see how much came into your account and how much went out. (Hopefully, more came in than went out.) Many of your credit card statements can categorize expenses, so you can easily see what you are spending and where your money is going. You can also sign up for services like Mint.com, which can help you track your financial life online.

Knowing what you spend is important. We’ve developed a process for our clients called the 24-month checkbook drill. With this exercise, we have our clients look at the last two years of checking statements. From that review, they can determine the average amount of money they are spending each month. Knowing this figure can really help you plan for your retirement.

But with all of these tools, few people ever plan their monthly expenses. Many people likely take a guess and are off by thousands of dollars. Making matters worse, people tend to think they will spend less in retirement, when they will probably spend the same amount or even more. If you’re a boomer nearing or in retirement, here are five reasons you should be budgeting.

You can determine how much you are spending. Without a budget, how would you know if you are spending too much or living beyond your means? You can’t control taxes, inflation or the market. The only thing you can control is your spending. There are lots of things people do not include in their budget, either because they are seasonal or one-off expenses. For example, most people don’t budget for gifts. But if they did, they might rethink how much they are spending on that category. With respect to retirement planning, you need to know what is going out the door each year.

You can set aside money to keep and money to give away. While you want to take care of your family, friends and charities, you also need to make sure you have enough money to do the things you want and need to do. People often try to take care of everyone else, but they forget to take care of themselves first. If you have a budget, you will know exactly what you need to live on, and you will know what you can safely afford to give away.

You can create a beneficial habit. Budgeting is a lifestyle. Once you develop these skills, it is easier to budget without even thinking about it. It’s important to have discipline and control, and that discipline is strengthened with repetition. The more you do it, the better you will get at doing it. However, the most difficult part is starting. But rest assured, the longer you do it, the easier it will be for you. It’s also beneficial is to start a budget alongside a friend. That way, you can help each other and have an accountability partner.

You can manage ever-increasing expenses. In retirement, things keep getting more and more expensive. Some of the items you buy each day will cost more based on the regular inflation rate. But other things, like health care, long-term care and major household repairs can increase at significantly more than 2 percent to 3 percent per year. Planning and saving are the best ways to prepare for these expenses.

You can save more for unexpected or discretionary expenses. Rainy days, emergencies and vacations are all parts of everyday life. By setting a budget, you can always add a new item to save for. For example, some people start a holiday gift fund in the summer that allows them to put away a small amount each month to pay for the gifts they will buy later. It also keeps them from having to buy those gifts on credit. Or what if you want to take the whole family to Disney? That will not be an inexpensive vacation, so you may need to save well in advance. Putting it in your budget will help it become a reality.

More from U.S. News

How Boomers Can Avoid Going Bust in Retirement

12 Surprising Facts About Boomer Retirement

10 Ways to Build a $1 Million Nest Egg

5 Reasons Every Boomer Should Stick to a Budget originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
Read Next Story

Related News

What DC-area photographers who usually cover concerts, theater and events are doing for you now

Three popular restaurant chains post layoff notices for nearly 3,000 in Maryland

Weather service confirms that tornado hit Caroline County, Md.