Barbara is a 68-year-old retiree in Kelowna, B.C., whose husband died last year. Making a sad situation even worse was mounting financial worry. “For years, I never worried about money. If I wanted something, I bought it,” says Barbara. She’s now faced with learning to budget on a fixed pension income: one from her late firefighter husband, another from her former career as an insurance broker, plus one each from Old Age and Canada Pension — altogether, $3,600 to maintain her house and fund an enjoyable retirement.

The good life for Barbara includes two older dogs, dinners out with friends, an annual trip to Hawaiiand six great-grandchildren that she can’t help but spoil. But the problem’s not shopping — “believe it or not, I hate to shop!” she says — it’s budgeting everyday expenses (groceries, utilities, gardening supplies) alongside unforeseen ones ($580 at the vet, for example, or $320 for a new dress for her granddaughter’s wedding, which she attended in the days below). “It’s just all a bit tight all the time,” she says. “If I want to do something around the house, or if I have a big vet bill, how do I budget for this? I just can’t get my head around it.”

Alas, despite a healthy emergency fund of almost $25,000, Barbara is stressed out about money almost all the time — the exact opposite of a relaxing retirement. She wants to know: “How can I budget for a happy retirement and do all the things I want to do?” We asked an expert to peek into her wallet this week and help her out.

April 14:
Gasthaus pub, dinner out for a 60th birthday party, $105

April 15:
Home insurance, $141
Cleaning services, $115
Superstore, groceries, $11
Life insurance, $79
Phone bill, $50

April 16:
$0

April 17:
Superstore, groceries, $19

April 18:
Original Joe’s, dinner out, $52
Superstore, more groceries, $19
Potting soil, $15

April 19:
A&W, lunch out, $10

April 20:
Case of wine for wedding, $111
Safeway, groceries for the wedding, $184
L & D Meats, prime rib for eight, $105
Garden supplies, $55
Avon, makeup and shampoo, $64

Weekly Spending Total: $1,135

The Expert’s Take

A little reality check for Barbara from Tom Feigs, financial planner and retirement expert from Money Coaches Canada: “This spending looks like a lot more than $3,600 [a month],” he says. “It’s okay to have discretionary spending, but it has to fit into the budget. You should never be going into debt when you’re retired.”

Lack of information and uncertainty about whether you’re overspending or not is a recipe for unhealthy stress, he adds. Barbara needs to fix this — here’s how: “First, she should think about priorities. What makes her happy? What makes for a happy life?” Some of these aren’t particularly wise financial investments — the dogs, for example — but they might pay off big-time emotionally. “If something’s a priority, we can make it fit. But maybe that means less dining out, or no new clothes, or less travel.”

Barbara shouldn’t touch her emergency fund at all, if possible, and start by looking at the big picture with a complete year’s worth of spending. “Then I suggest separating that into specific savings accounts, like buckets, for day-to-day or travel or dogs or grandkids,” says Feigs. A dog expense comes from the dog account, a kid one from the kid account, etc. “Every time she gets paid her pension, it should be distributed proportionally into the buckets so they constantly refill.” If and when a bucket runs dry, Barbara needs to squeeze that cash from elsewhere — or not spend it at all.

It’s hard but not impossible to change your lifestyle at 68, and important to have support. “I see a pull here between wanting to be generous and needing to be frugal,” says Feigs. “She needs to be honest with her family that she has limited funds and not a lot left over.” Barbara should know that spending time with family is just as great or better than spending money. And, unlike money, she can feel free to go overboard.

This post is part of Spend It Better, a personal finance collaboration between Chatelaine and MoneySense about how to get the most for your money. You can find out more right here.