With the cost of living continuing to bite, many older Australians are taking a closer look at their finances after the expensive Christmas and New Year period.
For seniors on fixed or limited incomes, the start of the year is an ideal time to review household budgets and regain a sense of financial control.
Creating a budget doesn’t need to be complicated or restrictive. In fact, a few simple steps can provide clarity, confidence and peace of mind throughout the year.
The first step is to review all sources of income. This may include the Age Pension, superannuation payments, investment returns or part-time work.
Once income is clear, it’s important to list regular expenses such as utilities, groceries, insurance, rates and medical costs.
Understanding exactly where money is going is the foundation of good financial management and can be done using a notebook, spreadsheet or a free budgeting app.
Separating essential expenses from discretionary spending is another key step. Everyday needs such as housing, food and healthcare should always be prioritised. Once these are covered, money can be set aside for extras such as social activities, hobbies, dining out or travel. This ensures important commitments are met before spending on non-essentials.
Many financial counsellors recommend setting a weekly budget rather than thinking in monthly or fortnightly terms. Weekly budgeting makes it easier to manage day-to-day spending and spot problems early, helping seniors avoid small overspends that can add up over time.
Building an emergency fund is also strongly encouraged.
Unexpected costs, including car repairs, appliance replacements or unplanned medical expenses, can quickly put pressure on a fixed income.
Setting aside a small amount regularly can help build a buffer of $500 to $1000, providing reassurance when the unexpected arises.
Budgeting is particularly important in retirement, where unplanned expenses can lead to dipping into savings or relying on credit.
A simple, realistic budget that accounts for irregular and seasonal costs can help maintain financial stability and reduce stress.
One practical approach is to review bills from the past year and identify patterns. Spreading these costs across the year can help create a more accurate budget.
Taking the time to sort out a budget at the start of the year can help seniors feel more confident and prepared.
