Ep 117 | How Can Budgeting Help You With Retirement Planning

Budgeting for retirement is essential. In this episode, I will share why budgeting is important and how budgeting can help you with retirement planning. It’s time to quit thinking about budgeting as being restrictive but as your key to retirement. 

What We’ll Cover:

✅ Why budgeting is important for retirement success

✅ How budgeting works to give you financial clarity

✅ The key elements of a strong retirement budget

✅ What a budget can help you do to reach your goals

✅ How to make budgeting for retirement simple and effective

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Transcript

 Welcome to today's episode. I'm so excited to talk about budgeting and why budgeting is essential to your retirement plan. About a month ago, I was just thinking about all of the things I teach, all of the things I believe, and. I had this thought about budgeting because I believe there is so much power in budgeting, and I'm going to share that with you in this episode.

But my thought about it was realizing that budgeting isn't about the plan or staying on track, it's about the end result. Now thinking about many individuals who I've talked to , why they get off, budgeting. It's really the tracking that they do. But I know one client said I create a budget and then by the middle of the month it's just gone.

I just go off the rails. It doesn't even look like what I'm spending and. Thinking about that, the budget isn't about the plan or staying on track, that really comes with a scarcity mindset and keeping yourself in control. Especially if you're like, well, I need to budget my money this month. This is where I'm spending it now.

I need to stay in control. That is, I'm not motivating. There is no reason why you should budget. I get why you are just throwing the budget away. What if you approach it differently? If you approach it by thinking about what do I want the end result to be? Yes. This can be a goal. This can be desires that you want to have happen with your money, but really the end result.

And it's not the end of the end, but it's where you want to go with how you want to feel. Even do you wanna be less stressed? What does that mean? And defining those specifics about why you're budgeting can help you be a much better budgeter. If you've just been budgeting to budget your money and stay in control, that kind of sits in that scarcity mindset.

Think about budgeting as the. The framework that gives you power over your money to achieve what you want. To explain this just a little bit better if you have been listening for a while and if you are a newsletter subscriber of mine, you know, I've been working on my health journey for a while a lot, but in a coaching call the other day with my online fitness instructor, she talked about.

Nutrition has to be in the driver's seat if you wanna lose weight, it always comes down to that. We want it to be something else. The budget also needs to be in the driver's seat. Just like you can't out exercise a bad diet, you can't control spending without a budget. Actually, let's rephrase that.

You can't create. A dream, a desire. You can't reach there without a budget. We need to think about budget as being a framework. This is, how much money I have monthly, we don't have any more than that. Here are my needs, here are my desires, and that is what equates to a budget. Within your needs, you have your bills, your food, all of the basics.

Your desires is everything else, and it can only go so far. But if you create a your budget around your biggest desires, so as a listener on Wealthy after 40, you've probably thought about retirement and how you're going to get there. That is your end result. Or one of your end results. It doesn't end at that point, but budgeting in a manner to get you there.

If that is one of your desires, you better have a savings line for retirement in that framework of the budget. Maybe you're like, well, I just wanna pay off debt better have a line item in that budget. It has to be there for it to happen. It has to be there for you to see how quickly you can get there. If something else is standing in the way, maybe you're somebody who's like, I want to take my family on a large vacation.

I'm gonna do it next year. It better be in the budget. Kind of get in the gist. It better be in the budget. For 17 years, I helped manage a $60 million budget. And granted, we were building the budget, geez, like five, six months in advance. But I said to them, it has to be in the budget. Well, I don't know if I need it next year.

What if you do? It has to be in the budget. It has to be in the budget. There are some changes you can make, but right now what are your biggest needs? Put those in there. Well, if something else happens, yes, and that's what you're thinking as well. Put that in there. Put your savings line in there for that family vacation.

Put your savings line in there for retirement. Hopefully it's coming out of your paycheck and not even coming here. However, anything that's after the fact will come out of your take home pay, correct. But thinking about it as a framework, it's building what we want it to build. It is driving us somewhere.

It has to be in the driver's seat. There's so much power in budgeting whenever something would happen. When my sister-in-law passed, we had helped, she was single mom, co-signed on her home. Within minutes. I now had an expense. I went to my budget, I put it in there, and I removed a lot of things, but I was so grateful for that framework to make it appear right, because we still have to go through the efforts of what actually happens, but I created the framework to cover that second mortgage and be able to survive all of our essential needs.

Until we could, could kind of change the way things were moving, the way things were going on. I was so grateful for my budget. I was also grateful for my budget when it was time to retire. My husband five years early, I. Okay, here's the budget. Here's what's going to happen. I anticipated what it'd look like.

He wanted to go get another job right off. And I'm like, no, I gotta make sure my budget works and I live by a budget. I know a lot of people don't. You might live by tracking or something else, but we really need to build a framework. It really needs to be there. And when things happen and life happens, we have to pivot.

The budget allows us to do that with ease. Okay? It's still a stressful time. We're still wondering how things are going to happen, but if you can start moving those pieces around to cover whatever new thing has presented itself, the budget will give us those answers. How can we shift? Where's this going to go?

How will we, will we be able to do all the things we're still doing? It is so crucial to get in that frame of mind about budgeting and realizing it is just a framework. I wanna go quickly back to, the things I hear about, well, it's not right, it's not going to be right. Just like when I said, helping law enforcement officers budget a $60 million budget.

And it's so months much ahead. It was never right, but we knew what we would give up to get. It's the same with you as the month rolls. As you get better with budgeting, that budget isn't going to change a lot, but it is crucial to see that picture. It is crucial to have that framework. The second piece.

'cause you're probably wondering what does this have to do with retirement? Budgeting is essential to your retirement plan. If you create that estimated retirement budget, what you've got going on, what's going to carry forward. What you would like to add, and from that, you create your FI number.

Just like we talked about in last episode with my client in the VIP session. Knowing those expenses, detailing those expenses, refining those expenses, gives us control over how much we need to have saved. My other client came to me. She was working with a financial planner. And he asked her, how much do you need to live on every single month?

Now, she managed her money. Well, she came to me with no debt, paid off their credit card every single month. They were still able to remodel their home, all of those things. But she was unable to answer this question for her financial planner. This comes back to a budget. This comes back to where are you spending and what are you spending?

You get the framework, you refine that framework every single month that you use it, that you're tracking, that you're getting a better understanding of where your essential spending is going,  groceries are up and down. Fuel is up and down. Entertainment might be up and down, whatever those things, but the more you use it, the better you understand it.

And then as you desire for retirement, you add and take away some things. Budgeting helps you answer the questions that your financial planner will have, rather than having them just estimate 70% or 80%. And when you get there, you realize that wasn't enough or that was too much. I could have retired sooner.

We, the budget has so much power. To go back to my initial thought, budgeting isn't about the plan or staying on track. It's about the result you want. To help support you, I want you to ask yourself right now, you might need to think about it for a while. What is the result you want from your money today that you are not getting?

If you are stressed, a budget will help. If you want to retire early, a budget will help. If you want to buy a second home, a budget will help. Think about it as like an artist's palette. The budget, it's a framework and you can move pieces around to benefit what you want your result to be. Until you define that result, there won't be that relationship with budgeting.

I jumped in my budget the other day as we are getting lawn care here and I have a new expense. I jump into my framework, but as I opened up the. File. I was like, oh my gosh, I still have all of my budgets going back to when I was on my retirement journey. And I just keep going and I just keep moving.

When we relocated here, I had an estimated budget. It took. I don't know. It probably took six months before I knew exactly what the expenses were, because here utilities are every other month or every three months. And yeah, trying to understand what that monthly expense was, took some time.

But having that framework, having that start, being spelled out, I can fill in and then when that lawn care bill comes in, I can be like, alright, it's going to be this much. How much. do I have, where do I shift it from? Are we going to be okay? And it just kind of gets you in that sense of we can do it, it's going to be fine.

 it's going to be, not taking away from what our result is that we want it to be.  If you're needing help creating a budget, we do this in the VIP session as well, just helping you. Kind of craft an initial budget, but then you do need to be able to track against it, with a cashflow management system, meaning you know where your money is going, when it's going, whether it's supporting you as spending or savings, and really refining those numbers on your budget.

I hope you will give budgeting a second thought. Lean into it. Learn to create your own power and budgeting will do amazing things for you. Before I finish this episode, I just wanna share that as you've seen, I have not been doing episodes for guests. Every Friday I'm going to have them sporadically with some sense of regularity.

But the episodes will relate to the discussion I have in my episode to continue that conversation, to enhance that conversation, to maybe go aligned with it because it's an expert area that I don't have experience in. Just be sure to listen for those, or watch for those. They may or may not pertain to you.

I understand that, but I'm trying to fit them in more cohesively to give you a. A sense of flow, a sense of continuity with this podcast. The first episode, and I'm, they'll just be bonus episodes, is with guest Melissa Pavone. She's a divorce financial analyst. as I said in the episode, when life happens, we need to pivot and sometimes we need to learn who can help us.

If you're going through a divorce or you're. Possibly headed there. I hate to say it like that, but listen to her episode on how to keep things very financially stable for both people. She's actually a mediator and. Just the thought she shared, the discussion we had had me realizing that while I do work with clients who have been financially hurt and they're struggling, and that's why they come to work with me, that somebody like her and they're trying to get the word out about this. So  tune in on Friday and I will see you back here on Tuesday.