You might ask why come up with a budget system? The standard answer is to control spending and “find” money for savings, but I think it’s more fundamental than that. Budgeting breaks the link between income and spending. If you run short on money while employed you can work harder and get a raise, take a second job or finance the purchase (apparently a very popular option) into the future in the hope that your savings or income will improve before the bill arrives.
In retirement, you are in a fixed income plan and the options to fix excessive spending are limited. Here is my list of the most obvious choices,
- Go back to work, but then you wouldn’t be retired, by my definition.
- A reverse mortgage, which I might discuss at some point, if only to encourage people to shun them.
- Chase returns from the market and take excessive risks.
Looking at the choices for increased income in retirement, the obvious conclusion is that spending must be regulated to stay within income.
In the next post I’ll detail my lazy boy budget system. Being the benevolent blogger I’m giving it away for free. Plus it’s not my idea and I don’t provide any warranty or guarantee, so what would I be selling?
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