Retirement can be an exciting time—you are now free to travel, and live, anywhere you would like. But it is also a scary time, especially considering you no longer have an income to help smooth out any emergencies.

We recommend taking time to create a retirement budget, amass a nest egg, and have an emergency strategy to ensure your retirement years go as smoothly as possible. Read on to learn how to create a retirement budget and stick to it.

How to Create a Retirement Budget

1. Start Big

We know you are dying to visit Europe, but before you book a tour, you need to ensure your everyday living is accounted for. How much is your rent or mortgage? How about health insurance? Groceries?

We recommend using a spreadsheet to track these costs first, so you can ensure you have enough for basic living before you plan the fun stuff.

2. Trim the Excess

Chances are, there are several small things you are paying for now that you won’t need in retirement. For example, if you live with a partner and you are both retiring, consider selling one car and only keeping one to share. After all, you won’t be needing it to go to work every day.

You may also have several streaming subscriptions, and while you might have time now to watch your favorite shows, if you are also planning to travel a lot, you may not need as many subscriptions as you used to have. Plus, you can look into your local library, which might have DVDs you can borrow for free (if you have a player).

**Be aware that some bills, like your electric bill, may increase in retirement. This is also why it’s important to trim where you can to account for this.

3. Plan for the Unplanned

Just because you are no longer working doesn’t mean your health, house, and car will all stop changing. You need to budget for basic home and car repairs, as well as increasing medical costs.

No matter what your budget it, a small amount needs to be put away every month for emergencies. You never know when the water heater will break, or a storm will crack a window. The general rule of thumb is to save 10% of the value of your home each month, but we recommend taking this a step further and saving 10% of your pension each month, because medical and home emergencies can be extremely costly.

4. Set a Spending Budget

Now, after planning for your costs, even with trimming and savings, you likely don’t have much left. That is normal. Unfortunately, retirement isn’t as affordable as it used to be. We recommend, of what’s left, setting a spending budget for yourself. If after everything this month, there’s $150 left, that’s your spending budget.

We know you are looking at this and wondering how you’ll ever get your trip to Europe, but that’s just it, you’ll need to save for several months before you can book your trip, and even then, you might need a payment plan. It can be disheartening to realize you can’t jump on a plane the day you retire, but if you are still working, we recommend starting a vacation fund early—that way, you can go sooner rather than later.

If you are still unhappy with the amount you are looking at, consider part-time work or a side hustle for retirees.

How to Stick to a Retirement Budget

The only thing harder than making a retirement budget is sticking to it—especially around holidays, or when your friends invite you to a fancy lunch. But you do need to stick to your budget, and here are some tips for how.

1. Spend Time Learning

Despite common belief, people aren’t born knowing how to save money and budget. You never know when there might be something available to you, for free, that you aren’t aware of. For example, some churches offer free meals for seniors on a certain night, or meals for a $1. Another example is libraries for borrowing books for free, and community center get-togethers, which are often free of charge.

You have time now, spend it searching for free ways to have fun and socialize, so you can save money when times are good.

2. Gift Your Time

Gifts are a tough one on a retirement budget, especially if you have several grandchildren. We recommend finding ways to gift your time instead of money (like taking your grandchild to a special park outing just the two of you) or check out our list of ways to give gifts for free for more ideas.

3. Consider Downsizing

Chances are, as you were making your budget in the step above, you were shocked at how much you spent on certain things. If you have a large home with a lot of possessions, it might be a good idea to downsize before retirement—because the larger the house, the more things you have to worry about going wrong! You also may want to look at sites like eBay to sell items you don’t use anymore, which can help build your nest egg for travel.

4. Be Proactive

The best way not to break your budget during retirement is by being proactive. This means medically (getting regular checkups and not waiting for emergencies) and in your home and social life. Start Christmas shopping in May, and buy one gift each month until December. Know your water heater is old? See about replacing it before it goes out, watching for deals from local companies. The problem with waiting until things are dire is that you don’t have time to shop around for the best price—eliminate this by searching for the best deal in advance.

As you are downsizing, consider looking at serviced apartments, though this may be a little more pricey than a mortgage; this can help you to save in the long run, especially if your home is older. We recommend buying a serviced apartment outright if you are able, then just paying the HOA fee monthly—keeping your costs low.

Overall, planning a retirement budget and sticking to it is difficult, but with these tips, we hope you will find something that works for you!