One of the biggest keys to successful money management is to learn to live within your means. In our culture of instant gratification, it can be hard to distinguish wants from needs. As empty nesters, it may seem that you have finally established yourself financially and earned some indulgence. But retirement is just around the corner, and you may still have past expenses to pay off. Mastering money management can help you to live within your means.
Paying off the past
If you are going to live within your means, you need to apply the philosophy of responsible money management to paying off past debts. You may still have your children’s college bills to pay for. If you used PLUS loans (federally sponsored education loans for parents), you have some options for repayment:
- Standard – fixed payments throughout the term
- Graduated – payments that start low and gradually rise
- Income-sensitive – payments based on your actual income
- Extended – payments for a longer timeframe
- Consolidated – payments that simplify several loans into one.
You probably want to pay these loans off as soon as possible, so you are not still paying your children’s’ college debt when you are retired. Choose a plan that allows you to pay off the debt as soon as possible.
Preparing for the future
This is the time when your years of money management should pay off with a nice nest egg for retirement. At this stage of your life, you may find that you have excess income. It is important to not succumb too easily to wants at the expense of your retirement. Investing in your retirement should continue to be your priority. Although you may have more discretionary income to spend on wants, carefully manage your money to assure you’re your retirement needs are taken care of.
Staying smart
For the first time in many years, you may be responsible for just your spouse and yourself. Your kids are out of the house and starting their careers, so they no longer need you financially. With this money now freed up, it can be easy to become a little indulgent. Of course, if you can afford it, it is not bad money management to spend on your wants every now and then. But, you want to stay smart and continue to place your needs over your wants. It is of the utmost importance now, with retirement approaching, to avoid credit card debt. Whatever you purchase, make sure you can afford it and that it does not take away from your retirement savings.
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