While you were still working, you could shrug off holiday splurges because you knew you could work overtime or side gigs after the new year to pay off the bills when they hit your credit cards. Now that you are on a fixed income, spending with abandon toward the end of the year could mean a few lean months during the second part of winter.
You do not want to choose between buying your medication or paying a credit card. Here are tips on how not to go broke during the holidays if you’re retired:
Set a Budget Without Feeling Like Scrooge
Money can slip through your fingers during the last couple months of the year. We feel happy and generous, wanting to have a few magical weeks in which we need not think about money. It's hard to remember where all the money went, when you face the credit card bills in January’s cold light.
The good news is that you can have fun and be generous with your loved ones, without dire financial consequences – as long as you set a holiday budget and stick to it. Dave Ramsey suggests a zero-based budget. Here’s how that concept works. Let’s say that your income in retirement is $2,500. Whatever you use for bills, investing, saving, donating, and spending should total $2,500. It is best to use a zero-based budget throughout the year to live within your means, not just during the holidays.
It is easy to overspend when retired, because you have more free time on your hands. When you do all the things you did not have time to do when working and raising your family, the costs can add up pretty quickly. Traveling, eating out in restaurants, going to concerts and plays and visiting family can come with a hefty price tag. Keep your finger on the pulse of your spending. Allocate a budget line for gifts, holiday entertaining, travel and special events.
An Ounce of Prevention
Do not put off maintaining your car and major appliances throughout the year. Murphy’s Law can kick in, and your water heater can fail when you have a house full of guests for the weekend. Emergency repairs during the holidays can cost double or even triple the standard rate. To avoid this budget buster, do not procrastinate on routine maintenance and minor repairs.
Tis the Season for Crime
Scam artists and common criminals take no holiday. They are more active around the holidays. They know people will likely carry cash and credit cards, and to be less vigilant than usual because they are having fun with friends and family.
From purse snatchers to people who attach electronic devices to ATMs to steal your credit card account number and password, you must remain on guard to protect yourself from becoming a victim. Nothing is like a crime to ruin your holiday spirit.
Your local elder law attorney can explain ways to keep yourself safe from financial criminals and tell you how your state’s regulations differ from the general law covered in this article.
Dave Ramsey. “How to Set Up Your Christmas Budget.” (accessed October 19, 2018) https://www.daveramsey.com/blog/create-a-christmas-budget
Australian Securities & Investments Commission. “12 money tips for Christmas.” (accessed October 19, 2018) https://www.moneysmart.gov.au/tools-and-resources/news/12-money-tips-for-christmas