Living on a fixed income can feel like hell to some, and yet it can be a blessing for others. It all depends on the income you receive, but also the way you manage your money. But how do you live well on a fixed income? Is it even a possibility?
These are some questions you will find answers to in this article. I believe that everything is possible with proper money management and planning. And down below, you won’t only find something you might already know – but you’ll find tips and solutions to resolve the most common problems for everyone who lives on a fixed income.
Is Living on a Fixed Income a Bad Thing?
Fixed income doesn’t necessarily mean to be a bad thing. Fixed income simply means that money rarely varies, and if it varies, it doesn’t vary by much.
Unfortunately, fixed income can also mean surviving only on social security benefits in which situation, living on a “fixed income” can be a bad thing.
It all depends on the amount of money you receive and even the number of income streams you have. But can fixed income be a great thing? Of course, it can. Imagine if you had more than two income streams that were more than decent for a comfortable living in your state. Do you think that life on such fixed income this way be a bad thing?
It definitely wouldn’t!
I understand that fixed income can be extremely hard for most people out there. From my experience, I understand that in order to do well with a fixed income – you need to think a couple of steps upfront and have a distinctive mindset.
Once you know what you have to be aware of when you live on a fixed income – it’s all about learning how to improve your money management and living habits in order to get the most out of your fixed income. Therefore, let’s start with things you should keep in mind as a person who lives on a fixed income!
Things to Keep in Mind When Living on a Fixed Income
One of the most important things to keep in your mind is that the cost of living is constantly increasing – and even before you know it, a decent fixed income can turn into a “getting-by” type of fixed income. Another downside for people living on a fixed income is the potential inflation.
Whether it’s the real estate, currency, or even the cost of living – in 8 out of 10 cases, fixed income just can’t keep up with ha quick inflation. And even though you can’t avoid potential inflation – you can prepare for it.
This is something that’s not done by 80% of people who are living on a potential income and yet it could be a game-changer when considering the future. Most of the tips I’ve listed below are something almost everyone knows so far – but actually taking action and getting better at things can improve your situation.
Therefore, let’s start with 6 ways that will help you live better on a fixed income, but even show you how fixed income can be turned into your favor!
6 Ways to Live Well on a Fixed Income
Finding yourself in the worst-case fixed-income scenario is horrible, and unfortunately, it’s happening day after day and it’s becoming normality. However, it shouldn’t be this way, and even if you found yourself in this situation – there’s one thing you need to know.
Such a situation is not permanent! You might not have a choice and you ended up in the situation – but now you have a choice to start making changes and improve your financial situation!
Rethink Owning a Home
If you’re paying for a mortgage and your income is fixed – it might be a better idea to get the equity out of your property straight away. This will allow you to increase your financial situation immediately without having to wait to pay off the property.
Also, even owning a home doesn’t mean that you will live more comfortably on a fixed income. In fact, renting a home or even downsizing is 8 out of 10 times a better decision. However, if you’ve already paid off your home – rethink the maintenance costs and whether getting equity out of your property and renting a smaller apartment would be a better idea.
In the end, nothing is set in stone and even if you have worked your ass off to pay off the mortgage – you don’t have to be stuck with a home. It’s probably full of equity you could use to invest or start another stream of income without having to live on the street.
Consider Moving for Tax Reduction
Depending on the source of your fixed-income – some states might be a better option than others when it comes down to tax. As someone on a fixed income, you still have to pay taxes. When you closely have a look at the money you have to spend to pay off your taxes – moving might seem like a more sensible idea.
Some people might even be able to combine a great move to a more affordable home along with a tax reduction. Consider what is tying you down to the state you are living in and whether there is any other state you might like living in.
Have a look whether this would benefit you financially – and if the answer is yes, you might have a lot to think about! Even though a huge move can seem like a big deal, think about the benefits this move could have on your financial situation.
Manage Your Money Efficiently
It’s no secret that managing money on a fixed income is one of the most important skills you need to possess. However, money management is not something we are all taught to do.
And that’s okay. Efficient money management isn’t hard and luckily the internet has all the information we need to learn how to responsibly manage our money.
Not only we have access to plenty of information online – but we even have access to free tools such as Mint. Mint can help you have a clear insight into your finances but it is also packed with plenty of features that could help you understand the way you are spending money, but also the actions you could take to cut down your spending.
Choose Better Food & Cook Your Own Meals
I don’t say that you shouldn’t eat out occasionally, but eating out regularly can easily drain your wallet. Cooking at home seems like the best option when living on a fixed income.
However, when it comes down to choosing your food – healthy food can sometimes be a bit more expensive than junk food. It’s important to find a balance between healthy food and affordable food. You don’t want to drain your wallet, but you should also think of your health as well.
Reduce Cigarettes and Alcohol
Cigarettes became normality and with its addiction, you could end up spending hundreds of dollars without thinking twice about it. Quitting cigarettes is hard, I get it, but think of all the financial benefits this would introduce.
Not only you would end up having a bit more money in the pocket – but you’d also become a lot healthier. The same thing applies to alcohol. Having a glass of wine from time to time isn’t a bad idea – but you shouldn’t go overboard!
Start Creating Another Stream of Income
What if I told you that creating another stream of income or even starting your own business isn’t as hard as you think it is?
With the information available on the internet and educational platforms such as Wealthy Affiliate, you can start working on your own online business on the side and potentially increase your income in the future.
It’s not going to be easy, but learning and working on something on the side will keep you right on track to a better financial situation.
If you stick to it – who knows what your financial situation might be in the next 5 years? If you have a lot of time on your hands – looking for remote work you can do online such as virtual assistant remote work could help you improve your income immediately.
Not many people like living on a fixed income. No matter how secure that check might seem – there are always ways and opportunities to improve your overall life, health, and even have the possibility of creating something of your own on the internet that could turn into another stream of income.
And as I’ve mentioned earlier, you might not choose to live on a fixed income. But if you found yourself in a bad situation, chances are that it wasn’t your fault.
However, if you don’t take action towards something you know will help your financial situation – you might have a hard time living on the fixed income in the next couple of decades.
I’d love to hear from you, but I’m also here to help – if you’d love to learn more about how I work on creating another stream of income for myself, leave a comment down below!
All the best!
Founder/Creator: Living On Lean Means 💰