Living On A Fixed Income

Now that I’ve retired from traditional work I have to face up to the fact that for the next 10 years I’m living off a fixed lump sum and thereafter living off a pension who’s value waxes and wanes with the vagaries of the stock market.  Although I’ve lived for 20 years with a fixed salary, I always knew that I could work for longer if I needed more money before I retired.  Now that I’ve decided to retire my net income is essentially fixed and substantially less than my previous gross salary.  As a result I’m already feeling a change in my attitude to money.  Every time an idea for a holiday, a day trip, a new gadget, or a meal out pops into my head it’s quickly followed by a nagging voice reminding me that I’m not replenishing ‘my pot’.  This is a shame, because I’ve never been one to worry about money, or to horde it, but I do like the warm sense of security that comes from having ‘enough’.

Since I don’t want to live the rest of my life worrying about running out of money or depriving myself of experiences in order to preserve my sense of financial security I need to change the way that I think.  The best way to do this that I’ve come up with so far is to start paying myself a ‘wage’ and to partition that monthly wage up for different purposes, allowing a surplus to develop that I feel comfortable spending.

For example imagine that I pay myself a wage of £2000 a month, from this I might decide that I’m happy to partition £200 for hiking day trips and encourage myself to spend up to that limit (I already operate a system a little like this for household repairs and saving for a new car so I know it stands a good chance of working)

The real benefit of a system like this is that I can use these pots of money to encourage myself to live the kind of life I want to.  Partitioning money for personal travel, family holidays, gadgets, gardening etc. and crucially having a clear intent that I should be spending that money, secure in the knowledge that it’s affordable.  The alternative is to live as frugally as possible, to delight in my simple life and simple needs, to be content with walking along the beach (rather than hiking in the Lakes) listening to podcasts on my iPhone 4s (rather than audio books on my 6 plus) enjoying the food I’ve grown in my garden (rather than eating out).

In the end I think I will blend the two approaches,  I won’t have enough money in my various buckets to fund all the experiences and things that I fancy, so I will end up appreciating things that don’t cost money just as much.

The photo introducing this post is of St Annes beach, my goto location for low cost inspiration.  I’m writing in Caffe Nero where I’ve been for a couple of hours drinking the free iced water.  Jennie and I are going out for brunch later though and then on to watch Jurassic World, a nice balance of frugality and costly experience.