Many of you whom have engaged our office in the area of financial planning know first hand, that I believe that all financial planning starts with a budget. It is one of the very first items that I require when a client retains our office in any area of financial planning. However, I am continually amazed when I am asked for an analysis absent of this vital information. My response is something like, ok, so which hat would you like me to pull from?
All kidding aside, whether you make thousands of dollars a year or a million dollars a year, a budget is the first and most important step you can take in putting your hard earned money to work for you and to avoid financial shortfalls in the future. A budget is a means to financial success. Budgeting is not about restriction, but liberation. When you understand how much money you have and where it goes, then you can properly allocate your funds in accordance to your goals and objectives.
Now, having said that, the manner in which you budget will depend on your personal financial situation and how close you would like to track certain expenditures. The complexity of your budget will also depend on where you are on your financial path and in meeting your goals and objectives for the future.
The hardest part is sitting down and creating one. From there, it is a matter of tracking all income and expenses. (Yes, even the cash expenditures for Starbucks afternoon lattes'). Over a period of time, weekly or monthly, you will begin to see the pattern of your income and expenses. You may be surprised where your money goes. For some reason, when earning and expenditure patterns are on paper, they become very real. From there, it is easier to make adjustments and allocate appropriate funds toward your financial goals and objectives.
The budget process becomes easier for those that utilize software to maintain their household accounting (Quickbooks, Quicken, etc.), as income and expenses are already categorized and it is just a matter of setting up the budgeting module and printing actual to budget reports over a specified time period.
Our office has several templates available to you. Please contact us and we'll be more than happy to send an appropriate template to help you get started.
Contact my office today to make an appointment to get started on your financial plan.
