Simple steps for older adults to set a budget

Baggerly recommends limiting discretionary spending to 20 percent to 30 percent of your take-home pay. “But if you're working toward a big goal, like paying off credit card debt,

trimming that percentage can make a big difference,” she says. “The less you spend on non-essentials, the more you can put toward paying down that balance faster.” STEP 2: DETERMINE YOUR

PRIORITIES Cagan says people tend to look at budgeting backward: They start by asking themselves what they should cut, when they should be asking how they want to prioritize where their

money goes. “When you change that mindset," she says, “it doesn’t feel like you’re depriving yourself.” When building a budget from scratch, start with the amount of money you need to

cover necessities, including any recurring debt payments you have to make. Then factor in an amount you can afford to put in an emergency fund, if you don’t already have one. Plan on setting

aside smaller amounts for other future goals until you’ve reached your emergency fund target; once you do, you can direct more money in your budget to your other savings goals, Cagan says.

Put everything in writing to account for where each dollar that comes in should go. Baggerly says she hangs her budget on the refrigerator right next to her weekly meal plan. “This keeps

everyone in the family in the know on what our finances look like,” she says. STEP 3: FIND WAYS TO BALANCE YOUR BUDGET If there isn’t room in your budget to cover all of your bills and reach

your financial goals, you have two options: spend less or earn more. When looking for ways to dial down your spending, don’t assume your bills are set in stone. Tiffany Aliche, a financial

educator and author of _Get Good With Money_, recommends carving out a day to cancel subscriptions you’re not using and to negotiate better rates or shop for deals on services you wish to

keep.  This could save you thousands of dollars a year, she says. For example, Walker-Wilson, who is a member of Aliche’s Dream Catchers group, says she cut nearly $300 a month from her

spending by dropping cable TV. Still, Baggerly cautions against making drastic cuts. For example, slashing your dining-out budget by half or more could set you up for failure. You’re better

off taking a gradual, more achievable approach so that you don’t get frustrated and give up.  “Acknowledge your habits and slowly scale back,” she says. “It adds up to savings over the

long run and prevents yo-yo budgeting.”