Retirement can be a period of enjoyment and fulfillment, provided you're smart about how you spend and manage your money during it. If you want to make the most of retirement while avoiding the financial stress so many seniors face, here are three habits to get into early on.

1. Following a budget

Maybe you never really used a budget during your working years. Or maybe you did, but your expenses have changed somewhat substantially since bringing your career to a close. No matter the circumstances, following a budget during retirement is one of the smartest financial moves you can make, and the sooner you create one, the better. This way, you'll be able to see where your money is going and where there's room to cut corners should unplanned expenses creep up on you.

Senior couple at a laptop


Imagine your car breaks down and it winds up costing you $1,000 out of the blue. If you're using a budget, you'll be able to fiddle around with different expense categories and cut back as needed to make up for that whopping bill. But without that budget, you'll have a harder time doing so.

Most importantly, having a budget will help you avoid overspending -- something you can't afford to do when you're on a fixed income. Let's say you plan on withdrawing $12,000 a year from savings, and that you and your spouse both collect Social Security for a total of $3,000 a month in benefits. All told, you'll have $4,000 a month at your disposal (though that doesn't account for taxes, which we'll get into in a bit), so if you see that you're regularly spending $4,500, it'll be a wakeup call to start reducing your expenses.

2. Living below your means

The older we get, the more unexpected health issues tend to arise. Similarly, as our homes age, they require more money to remain standing. That's why it's a good idea to live below your means in retirement. The less you spend, the more flexibility you'll have for when extra expenses strike.

Going back to our example, imagine that you're able to comfortably withdraw $12,000 a year from savings without having to worry about depleting your nest egg prematurely, and that you collect another $3,000 a month in Social Security. You may be inclined to spend $4,000 a month on living expenses, and there's technically nothing wrong with that. But if you manage to keep your expenses around the $3,500 mark, you'll have more leeway for unplanned bills. And if you hit a string of months where nothing goes wrong, you can always use some of that saved money for leisure purposes, like an extra vacation.

3. Paying estimated taxes

If you collected a steady paycheck throughout your career, you're probably aware that the money you received every few weeks didn't represent your gross earnings, but rather, your net earnings after taxes were taken out. But if you're withdrawing funds from a traditional IRA or 401(k) to pay your living expenses in retirement, those distributions won't automatically arrive in a post-tax fashion like your paycheck did. Rather, it'll often be on you to decide how much tax, if any, to have withheld from those distributions (though some financial institutions withhold a certain percentage as a matter of course).

If you aren't going to have taxes withheld from your retirement plan withdrawals, then you'll need to plan on paying estimated quarterly taxes throughout the year. This especially holds true if you have income from other sources, like investments in a traditional brokerage account. If you're not sure how much tax to pay the IRS every three months, it pays to consult a professional who can calculate that amount for you -- because if you underpay your taxes too heavily, you risk getting penalized by the IRS, which isn't something you want.

The more attentive you are to your finances in retirement, the less stress you'll encounter. Get into these habits, and with any luck, the one thing you won't have to worry about as a senior is money.