Budget planning for retirement means taking responsibility for your own retirement. Don’t rely too much on social security retirement benefits or state pensions because they are not designed to provide you with a comfortable lifestyle in retirement. They are designed as a safety net to ensure that you don’t starve.
It is great news that people are living longer after they retire from work but that is putting huge strains on governments to maintain their pension obligations and provide care to larger populations of old people.
So how can you ensure that your finances are in order for you to enjoy a happy retirement?
A good way of achieving this is to take charge of your own retirement plan. Your retirement plan should be properly documented on a spreadsheet or on an analysis paper. The spreadsheet should include these categories:
Projected Retirement Income from:
* state pension/social security retirement benefits
* Company pensions (defined benefit/defined contribution)
* annuities
* interest from savings
* rental income
* dividends, etc
* Less tax on total income (a deduction from total income to give you a net income after tax)
Projected expenses including:
Household expenses
* rent
* rates/council tax
* food
* utility bills (gas, electricity, water charges)
* household insurance
* house repairs and maintenance
* telephone bills
* television license
* cable tv subscriptions
Motor expenses
* petrol & oil
* car insurance
* road tax
* motor servicing and repairs
* subscription for breakdown service
Personal expenses
* clothes
* life insurance cover
* medical cover
* loan repayments
* savings plan
* charitable donations
* gifts for special occasions
* personal grooming
Holidays, leisure and entertainment
* theatre and cinema tickets
* tickets to support your sports club, etc
* subscription to gym/golf club
* night outs with friends
* luxury cruises and holidays
Don’t forget to allow for inflation in your budget planning.
It may be a good idea to try out the plan six months before your planned retirement to see how you manage on your budgeted retirement income and expenses. If you find yourself struggling to manage on the budgeted income and expenditure, perhaps you might consider taking a part-time job when you retire to supplement your retirement income.
One of the really cool parts aspects of Microsoft Excel is the functions Microsoft has created for you to use. This means that rather than have to develop a function from scratch you can use pre-built ones to do a plethora of tasks like Building your own Mortgage Calculator. The Mortgage Calculator or PMT function is just one of many Financial Functions available.
Okay, so how to build a mortgage calculator…
The first thing we have to do is to start by setting up a few basic headings. So lets begin by starting a new workbook and clicking in the first cell A1. Enter into cell address A1 the heading – Monthly Loan Repayments. Next off, enter into cell address A2 – Amount of Loan, cell address A3 – Interest Rate, cell address A4 – Length of Loan and then in A6 – Monthly Repayment.
In example mortgage calculator, we will take the Loan Amount, Interest Rate and Length of Loan and calculate your Monthly Repayment. Okay so in the corresponding field B1 enter the value of $200,000 and make sure you format the field as a currency. In cell B2 enter a value of 9.25% and format the field as a percentage and then finally enter in a value for the Length of the Loan as 25. The value you enter into the Length of the Loan field is in years.
Now its time to create the formula that will do your calculation for the Monthly Repayment. The function we will use for this calculation is called the PMT function. The PMT function always returns a negative number so one of the things we will need to do is to convert it into a positive number, but a little on that later.
There are three arguments we will use for this formula and they are -
= PMT(Monthly Interest Rate, Number of Payments, Amount Borrowed)
So to work out the Monthly Interest Rate we simply take the value in B3 and divide it by 12 – B3/12. The PMT function works on the basic of the number of payments you are going to make, so if we are going to make monthly payments on our mortgage we simply take the number of years in cell B4 and multiply it by 12 – B4 *12.
This means that to calculate the Monthly Repayment for our mortgage we need to enter the following formula -
= PMT(B3/12, B4*12, B2)
Now as I said before, the PMT function always returns a negative value, so to turn this into a positive value we simply type the PMT function with the Absolute Function encapsulating it as shown below -
= ABS(PMT(B3/12,B4*12,B2))
Simply type the formula above into the cell B6 and press the enter key. You must now format the cell address B6 as a currency and you can do that by simply pressing the Dollar Symbol on the Formatting Toolbar. As soon as you enter the formula and press enter you should get a result of $1712.76. If you do not get this answer, simply go back and make sure that you have entered the formula correctly.
The cool part about this Mortgage Calculator is that you can go back and change any one of the values in B2, B3 and B4 which are the Loan Amount, Interest Rate and Length of Loan to work out what your monthly mortgage repayments will be.
The cool part about this simple tool is that it tells you really quickly whether borrowing massive amounts from the bank is worth it and whether you can really afford that mortgage. Why not check out what your repayments will be if your interest rate went up by 2 or 3%, it can be really interesting to see the impact on your budget.
Simple tools like this can save you thousands of dollars and can also help you see what changes interest rates will have on your own budget. It is certainly worthwhile building yourself a Budgeting Spreadsheet and the mortgage calculator to work out just what you really can afford especially in these uncertain times.
Working out a budget for your bills is easy. Working out a budget for everything else seems nearly impossible. I mean, how can you say that you will only spend $30 on fruit and vegetables when they are sold by weights? To do this, you would have to carry a calculator with you when you went shopping and weigh everything before you bought it. This is beside the fact that the price of food seems to be continually on the rise. The same can be said for petrol. If you use 20 litres a week, what do you do when the price changes? You would need to rearrange your whole budget.
The solution to this problem is to budget for the most you think you would spend on these items. This way, if you don’t spend as much, you will have saved money that you can then put away for emergencies.
So how do you create your budget in the first place? Many people will tell you to start by writing down everything you spend money on for the next month. What if you want to start your budget now, instead of in a month’s time? Also if you have bills that only come every three or six months or even yearly, they won’t be included if you work out your budget from just one month of spending.
Let’s look at it from a different perspective. The first thing I look at is my regular bills. Things like rent, electricity, phone, insurance, car registration, loan repayments etc. These are all regular bills that need to be paid on time and are generally about the same amount each bill cycle. Therefore, the first step is to write down all of these bills and how much you will have to pay. The next step is to work out a yearly figure for each bill. For those bills that come monthly, you multiply the amount by 12. For three monthly bills, multiply by four and six monthly bills are multiplied by two. Then we need to work out how much these bills will cost us each pay period. If you are paid weekly, you would divide the yearly amount by 52. If you are paid fortnightly, you would divide by 26 and if you are paid monthly, you would divide by 12. This gives you the amount you need to budget for each pay period. The remainder of your pay is then used for food, petrol, normal living expenses and savings. Most people have a general idea on how much they pay each week for these items so that amount is used for your budget.
Now that we have our budget, how do we make sure that we stick to it? The first step is to make sure that our bill money that we are budgeting for is not left in our everyday bank account. The temptation to spend can be too great if the money is easily accessed. I heard about a system a few years ago where you get yourself a folder with plastic sheet protectors in it and have one for each of your bills. Then each week you put your budgeted amount of money into the relevant pockets so that when the bill comes in you just pull out the cash and pay it. The one big flaw with this system is that you end up with a lot of cash in your house. There is nothing to stop you from “borrowing” from your bill money and there is also the risk of having it stolen.
I recommend that you set up a separate bank account for your bill money. This account would ideally not come with an eftpos card but be accessed by telephone and internet banking. Most bills can be paid by bpay so when your bills come in you can pay them directly out of your bill saving account.
Canada is considered as one of the world’s richest countries with an extremely high per capita income. Yet a good economic health of the country does not do away with people taking loans and then falling into liability for not being able to pay back. To repay such debit, Canadians can fall back on free Canada debt consolidation.
Your Tool To Financial Stability
When multiple loan repayments wreck havoc on your financial stability and you see yourself drifting from good credit to bad then you desperately need some good assistance.
It is normal for most people to doubt the credibility of consolidation firms and believe that such firms are out there to milk them dry. While this is true of some illegitimate companies, the same cannot be said of everyone. You have to look for the right company, compare the services offered like quote, interest rates, and terms of payments before finalizing on your chosen consolidation firm.
These firms assist you sort out your financial mess and clear your long pending dues. Besides providing a reasonable quote for their services at first, the free Canada debt consolidation firm finds you better repayment terms like reduced overall interest on an extended payoff term.
These company also provides you with credit repair counseling, money management and guides as well as educates you about efficient management of your budget. This gives you as a customer the confidence of handling your future budgets with better ability.
What Exactly Is Consolidation Of Debts?
The following points will help you understand this further:
This is a loan taken to meet the expenses of all your outstanding loans. You can decide on the actual debt help after you are convinced of the quote provided by the firm. Having taken the loan, all you have to do is make one payment to your company who will ensure that all your other loans are paid for in time.
Multiple Choices
You will be given multiple choices featuring either long-term payment options with small interest or short-term payments options with higher interest or secured loans. Secured loan means that you take a loan against your property, car, property papers or such. Such secured loans give you the advantage of procuring a larger loan with a lower interest.
In event of you being unable to pay back the consolidated amount, then the secured object (house, car, property etc.) will be taken over by the consolidation company.
Free Canada debt consolidation is meant for Canadians in need of stress free debits. So go on, Canada make the best of it.