How to Budget While Living on a Fixed Income for Seniors

Following a budget can be difficult – unplanned expenses crop up: Maybe the weather is hotter/colder than usual; perhaps your car needs new tires. And it’s tough to always tell yourself “no” when it comes to entertainment or an occasional splurge.

But nowhere are these problems more tricky as when you’re living on a fixed income.

Benefit of Fixed Income

The benefit of a fixed income is that you always know what you have. Gone are the days when you’re ill, but have a job that doesn’t offer sick days. You also don’t have income surprises if you fall short of your sales or performance quotas.

But we think we can tackle this conundrum, so you can see – and experience – the upside of budgeting on a fixed income.

Why Do Budgets Fail?

Even when you’re mindful of your finances, you may still find yourself not following your budget. The frustration can also cause you to give up. But it may not be your fault: J.D. Roth at GetRichSlowly suggests that maybe you don’t have the right budget for your situation.

Roth offers a few reasons why budgets fail:

  • The method is too complicated
  • You try to control all your spending
  • Doesn’t reflect your true income
  • Too short term – monthly instead of yearly
  • Inconsistent about tracking spending

All budgets begin with recording your full income and necessary expenses, including housing, utilities, transportation, insurances, taxes, etc. Finally, people are advised to look at their discretionary income and factor that into your cash outflow.

It sounds simple enough – and it can be. Roth cites two examples of more “user-friendly” budgets: The Envelope System and The Balanced Money Formula made popular by Elizabeth Warren and Amelia Warren Tyagi.

The Envelope System:

This is the method my parents used, even when unemployed, and it worked well for them: Create one envelope for each household expense. Use that money – and only those funds – for its assigned category.

One potential drawback of this system is the temptation of having so much cash around – it might make it too easy to “fudge” categories.

The Balanced Money Formula

The Balanced Money strategy has only three categories: Must-Haves, Savings, and Wants. The Balance is 50 percent, 20 percent, and 30 percent respectively.

Roth advises that one challenging aspect is making sure you get these categories correct with the necessary expenses or target areas they represent.

There’s another concern about budgets in general, and that is not prioritizing your spending money. I recommend actually planning – through conversation or writing out – what you want to buy and why. Put actual “value” or importance on each book or jacket you purchase.

Then your spending money isn’t just disappearing month after month.

Of course there are many other budget methods you can adopt. And rather than throw in the towel, find the one that works for you.

Solutions to Making Your Budget Work

One key strategy for any kind of budget is to never stop saving money. By making saving a habit – even in small amounts of $10 or $20 dollars, you’re replenishing your emergency fund, savings, or “fun” account.

A low-estimate “emergency fund” is typically in the range of $500. And there’s never a time when you won’t need some extra money for an unplanned expense.

Now, a few solutions to making your fixed income work within your budget:

Grocery Bills

Even though a modest grocery list can add up in cost, it’s also one of the easiest places to save. Using the weekly sale ad for a grocery store will garner at least a few products you want and need.

For real efficiency and savings, try converting to an online shopping grocery service like Peapod. It’s easy and there are more bargains in more categories than your typical grocery store. Yes, there’s a delivery fee, but a) it’s quite low and b) you don’t have to drive.

If you’re not a savvy-couponer, the website LivingRichWithCoupons has many suggestions for beginners. The site is extensive, has many different kinds of coupon offers, and allows users to access printable coupons.

However, a common complaint about “couponing” is that the items you really use may not offer coupons in traditional newspapers or websites. Well, here’s a tip: By using the search engine of your choice, (e.g. Google) enter the name a particular product and the word “coupons.”

A recent search of Annie’s Organic Mac Cheese, Kashi Cereals and Progresso Soup, directed me to the main product sites that offered coupons as well as a few related sites with other offers. Consider it a DIY for getting discounts on the food products you prefer.

A note of caution: The LivingRichWithCoupons site is so extensive that it provides links to other shopping sites that offer questionable promotions (e.g. “Claim your $100 Walgreens Card). By trying to claim this deal, you’re led through all kinds of unrelated sites, such as lower cost banking rates, etc. In the process, they’re collecting a lot of information about you.


When weather gets extreme, it’s easy to suffer from sticker shock every time you open your utility bills.  Research “budget plans” that your electricity and gas companies offer and inquire if they have any programs for seniors.

The most common suggestion for keeping your heating costs in check is to use a programmable thermostat.  If you don’t have one, make this a priority.

As for electricity, the simplest step is to unplug all appliances when not in use.

While these two steps are simple, it will also “pay off” emotionally for you to monitor the reduction in your utility expenses.

However, depending on your overall income and the rest of your budget, you may want options for a few more proactive measures:

  • Bundle your cable, internet, and phone services
  • Cut back on phone extras like caller ID
  • Consider dropping your landline telephone
  • Revaluate your cable TV package

While water costs are usually less expensive, if you have a washer and dryer at home, see which items you can clean by using the “express wash” cycle.  Are you an avid gardener?  Invest in a rain barrel.


Once you factor in all your necessary expenses, take a close look at what your transportation costs are and compare them with your current needs.  Most likely if you and your spouse were both working you needed two cars.  Now that you’re retired or semi-retired, does that actual need still exists? 

Remember two cars also means two insurance policies, double the number of car washes, oil changes, and basic maintenance tasks.

Of course your particular situation will influence the end decision, but ask yourself:

  • Is having one car possible?
  • Do you have public transportation options?
  • Do you have special services available, such as shuttle bus transportation?
  • Should you downgrade your vehicle?

Remember, the money you receive by either selling a car outright or trading in for a more economical vehicle is more money in your pocket.


Health  insurance, life, auto, disability, home or renters insurance – it can be overwhelming.

Doesn’t it seem like as soon as you pay your home insurance, the auto bill arrives in the mail? And trying to successfully reduce your expenses without putting your insurance needs at risk is most likely to be quite labor intensive.

However, with the range of insurance needs we all have, it’s worth it.

Bundling to Save Money

One easy step is the same plan of attack with your utilities: Can you calculate and bundle your policies for more savings?  Also a new provider might be very amenable to passing on savings for a new account of this stature.

Other pockets of savings to look for include auto insurance: Are you driving fewer miles each year, now that you’re not working?  Ask about reduced rates for that.

If you carried a certain kind of policy for disability and are no longer working in that higher-risk field, can you take on a policy that covers your current needs?

You might only benefit from a one-time cost decrease, since insurance premiums tend to stay constant.  However, even with that singular “windfall” you can apply that to your emergency fund, home repairs, or use it toward a vacation.

Wear Your “Senior” Colors Proudly

Americans age 65 and older make up 13 percent of the population. You’re now part of a very powerful demographic with 35 million members. The American Association of Retired Persons (AARP) has 47 million members – they begin their “membership drive” when a person reaches 50 years old.

The clout you carry ranges from everything to elections to economic perks, so whether or not you carry an AARP card, you can still reap the benefits of senior discounts and maximize your leisure time without breaking the bank.

You don’t have to stay home to save a buck, you just need a smarter social life:

Be a Lifelong Learner

Want to learn a new hobby or skill? Check out the course offerings through your local park district, library, community colleges, or high school. Not only do you reap savings on tuition (and for some venues the workshops are free), you can choose to attend classes on site or learn online.

Follow Your Passion

Immerse yourself in the arts and attend concerts, cultural events, and museum openings. Not only do many organizations offer reduced ticket prices, if you volunteer or learn to be a docent, you attend for free.

Make the World a Better Place

Parlay your former “working hours” and volunteer for your favorite political candidate.   Help socialize kittens and puppies at your animal shelter and save a life. Got a “green” streak? Plant trees or get involved with a local gardening society.

Be Appreciated

Some local grocery stores have free delivery for seniors.  Your local library most likely has a delivery service so all the latest best sellers and blockbusters are brought to your door at no cost.

Also take some time and research companies that offer discounts on home and auto repair.

Get Physical

Gone are the days when you had to walk through the mall for exercise. Get fit with a senior membership to a nearby health club and try Tai Chi or yoga.


With so many opportunities for affordable services, entertainment, and personal development, you don’t need a 7-figure nest egg to enjoy your golden years.

This article was a blog contribution from Farrah Carpenter. She lives in Las Vegas, Nevada. She has four kids and loves to go hiking in the Red Rock Canyon National Conservation Area.