The effective management of funds becomes even more important for seniors after retirement. A decrease in income and potential for health problems make financial planning crucial for reducing stress and avoiding disaster.
This is especially true for retirees that don’t have the luxury of a pension plan to rely on. Fewer and fewer companies are offering adequate pensions in today’s economy.
However, good financial planning can help make the situation manageable, and assist in preparing for the future.
Finance Management Tips for Seniors
There are all kinds of strategies and procedures seniors can follow to get ready for the future, and live comfortably in the present.
A few financial suggestions that older adults could benefit from, include:
- Know your options
- Design a budget
- Make pragmatic decisions
- Explore alternative income sources
- Protect against fraud
- Plan for the future
Know your Options
One of the first things you can do for your financial future, is to explore all options available to you.
The more you know about your finances and the opportunities you have to keep them in good standing, the more secure your future will be.
Things like investments, tax breaks, and extra income streams can all contribute to financial security.
Design a Budget
Constructing an achievable budget is key for any older adults worried about current and future finances.
The idea is to make your budget as rational and sensible as possible to avoid going over it on a regular basis. This may involve limiting expenses and sacrificing some items or expenditures that you don’t really need.
Adjusting for a reduced income is easier said than done in a lot of cases. Once you get used to living a certain lifestyle, it can be difficult to give things up.
However, in some cases it is necessary to cut costs just to make ends meet.
Make Pragmatic Decisions
Part of staying on budget is making smart, practical decisions. Again, this can be a difficult prospect in certain situations.
For example, you may have an adult child that is having financial difficulties. As a parent, your immediate reaction is to provide financial support.
This may not be an advisable move if it interferes with your own budget. In the end, it could land both you and your son or daughter in financial trouble.
Alternative Income Streams
One recommended approach by financial experts for financial security is to create multiple streams of income.
For seniors with substantial work pensions, and OAS (Old Age Security) pensions, finding extra sources of income may not be necessary.
However, significant pension plans are becoming far less common than they used to be. Seniors without an adequate pension will have to look elsewhere for continued income.
There are more opportunities than ever for additional income streams through the world wide web.
In the growing information-based economy, expertise and knowledge in a particular field can be extremely valuable.
Safeguards Against Fraud
The internet offers opportunities for additional income, and it also presents opportunities for fraudulent practices.
Identity fraud is rampant these days, and seniors are often the target of fraudulent activity. Lack of security and education about identity fraud make seniors an ideal mark.
Learning more about the subject is a good preventative measure. Bank accounts can set up to provide immediate alerts for irregular activity. Debit and credit cards can be secured to only operate within a certain geographical distance.
More information about fraud protection can be accessed from the Get Cyber Safe program.
Planning for the Future
Taking stock of your current financial situation is an excellent way to help plan for the future.
Some recommended aspects to consider, include:
- Income vs. Expenses
Income vs. Expenses
The first thing to look at for financial planning is to see how your income lines up against your expenses.
You can make an appraisal of the income you are currently receiving, and how you expect that to change in the future. This should include all income sources, as well as government benefits.
If you are expecting a considerable change in your future income, then you may need to look for additional income streams in order to compensate.
The next step is to calculate monthly expenses and see how they measure up to monthly income.
If you foresee your expenses outweighing your income in the future, then implementing a solution now can help avoid scrambling and desperation in the future.
Getting proper insurance coverage can help provide extra security and support for your loved ones.
Seniors in Canada are potentially eligible for a variety of specialized tax benefits.
All assets should be included in total financial worth, including how much they may appreciate or depreciate over time.
Sound financial investments can also help provide extra security for seniors. Be sure to do extensive research before making any investments.