When determining a budget, it\u2019s important to have a firm grasp on what is a \u201cnecessity\u201d and what is a discretionary expense. Sometimes the distinctions aren\u2019t so clear cut.<\/p>\n
Qualifying discretionary expenses as necessities can lead to overspending on these items and using money that\u2019s better off being put toward short- or long-term savings goals<\/a> or debt repayment. This can be especially harmful for boomers, many of whom are retired and living on a fixed income.<\/p>\n<\/p>\n Find Out: Here\u2019s Why You Always Want to Know Your Net Worth, According to a Financial Expert<\/a><\/p>\n For You: 25 Places To Buy a Home If You Want It To Gain Value<\/a><\/p>\n \u201cMost Americans, including boomers, likely know what constitutes a traditional \u2018necessity,\u2019 but it\u2019s human nature to want to spend on things that bring us joy, regardless of whether we can live with or without it,\u201d said Courtney Alev, consumer financial advocate at Credit Karma. \u201cThe more important decision for boomers to weigh is how their nonessential spending habits impact their budgets and ability to stay on top of their financial obligations.\u201d<\/p>\n Here\u2019s a look at the nonessential expenses boomers are most likely to consider necessities<\/a>.<\/p>\n A Credit Karma study<\/a> from April asked Americans of all ages to share the top nonessential items and services that they consider to be necessities. Among boomers, the top choices were streaming services like Netflix and Hulu (29%), travel (23%), dining out (23%) and skin care and beauty products (22%).<\/p>\n \u201cPeople are choosing to find comfort in spending on the things they enjoy, even amid economic uncertainty,\u201d Alev said. \u201cHowever, it\u2019s important to audit your finances to be prepared in case of an unexpected expense or income change.\u201d<\/p>\n She recommended boomers audit their nonessential spending<\/a> to find ways to cut costs.<\/p>\n \u201cWhen deciding where to cut back, prioritize what brings you the most joy and value,\u201d Alev said. \u201cFor instance, if taking a vacation is how you want to treat yourself this summer, consider limiting how much you dine out or spend on skin care so you can allocate that spend toward an emergency savings fund instead. That way, you still get to treat yourself with summer travel while also building a financial cushion in case of an unexpected event or expense.\u201d<\/p>\n Good To Know: The Estate Planning Secret the IRS Doesn\u2019t Want You To Know, According To John Liang<\/a><\/p>\n Discretionary spending should be part of a boomer\u2019s budget<\/a> \u2014 they just shouldn\u2019t let it take precedence over other financial priorities.<\/p>\n \u201cMy No. 1 piece of advice is to ensure you\u2019re prioritizing your financial security above all else,\u201d Alev said. \u201cBefore you spend on your wants, make sure you\u2019re prioritizing reducing or eliminating any high-interest debts and that you\u2019re actively saving for a rainy day. Consider gamifying the progress you make on your financial goals, such as treating yourself to a meal out with friends once you\u2019ve achieved your savings goal<\/a> for the week.\u201d<\/p>\n In general, boomers do tend to be responsible spenders, Alev noted.<\/p>\n \u201cWe know from our study that most boomers are thinking rationally about their nonessential spending,\u201d she said. \u201cA majority (87%) say they will strongly consider cutting back on their nonessential spending if their financial situation worsens in the coming months, and 84% are not willing to take on credit card debt in order to maintain it.\u201d<\/p>\n More From GOBankingRates<\/p>\n This article originally appeared on GOBankingRates.com<\/a>: 4 \u2018Necessities\u2019 Boomers Spend Money on That Could Harm Their Finances<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"When determining a budget, it\u2019s important to have a firm grasp on what is a \u201cnecessity\u201d and what…\n","protected":false},"author":2,"featured_media":231573,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[78065,28,129102,129103,29198,147,530,129104],"class_list":{"0":"post-231572","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-boomers","9":"tag-business","10":"tag-credit-karma","11":"tag-discretionary-expense","12":"tag-discretionary-expenses","13":"tag-personal-finance","14":"tag-personalfinance","15":"tag-traditional-necessity"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/231572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=231572"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/231572\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/231573"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=231572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=231572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=231572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}