We have reached the end of our monthly budgeting series. For the final example we will be focusing on retirement planning. Take a look at this August budget example for credit counseling tips on growing your retirement savings.
Check out ACCC’s August budget example!
Budgeting for Retirement Savings
Retirement is real. Compound interest is real. And you will need every dollar and day you can to save. Retirement is not something you should wait on any longer than you need to. Generally, it’s advised to pay off debt first. Additionally, some people like to have a solid emergency fund of 3-6 months before focusing on long-term investing.
However, you can apply money to all necessary areas in your budget. While it’s best to eliminate debt with high interest rates, a low interest debt could be addressed while starting to save for retirement. Everyone’s situation is unique! You, and perhaps a financial planner, can make the best decision for your individual needs.
Below, we have created an August budget example that contains a few financial goals. First, our couple is still saving for their baby. Next, they want to build up their emergency savings. So they will continue to put a few hundred dollars a month away. They have a low interest student loan with just a few thousand dollar balance remaining to eliminate. Our couple also has a car payment. They do not have any credit card debt or anything with a high interest rate.
August Budget Example
INCOME
- Salary 1: $2,700
- Salary 2: $2,100
TOTAL= $4,800
MONTHLY LIVING EXPENSES
- Groceries: $600
- Household Items: $50
- Clothing: $100
- Cellphones (2 phones): $100
- Internet & Cable: $125
- Rent: $1,100
- Electric: $120
- Gas: $60
- Trash: $10
- Auto Maintenance: $40
- Auto Insurance (2 cars): $175
- Health & Dental Insurance: $350
- Renter’s Insurance: $20
- Entertainment: $50
- Netflix/Hulu: $25
- Student Loan Payment: $500
- Auto Loan Payment: $175
- Retirement: $600 (New Line Item)
- Pet Care: $75
- Savings: $275 (Decrease)
- Baby Fund: $250
- TOTAL: -$4,800
To accomplish their savings and retirement goals, we wanted them to save over 10% of their income per month in this August budget example. As a result, money has been moved from their general savings fund to a retirement line item, plus a little bit from their student loan payment. This may seem unproductive. However, their interest rate is low and the balance is on the smaller side. A $500 monthly payment will be plenty. Retirement investing is all about time. The earlier you start, the better your interest will compound and grow.
If you struggle to pay off debt, ACCC can help. Sign up for a free credit counseling session with us today.
