How many times have you tried to develop a family budget that would show how you control your finances for a month only to have all of your perfectly developed budget go right out the window? Somewhere around week three is typically when something unexpected happens then out of frustration you abandon the budget, and hope that things just work out.
In 2013 Gallup took a poll showing that only 32% of people prepare a detailed budget every month. This is down from a similar poll taken by Pew Research in 2010 that showed 48% of people had a budget. It's interesting that with all the new tools that technology has provided us with over the past few years the number of people trying to create and follow a budget is dropping. Maybe we need a different approach.
What if instead of hoping you have enough money left at the end of the month to put towards people or items you value, you focus on putting resources toward the things that are important to you? You can ensure that your values are being reflected in your saving & spending plan to build financial security by following a few steps. Here are some basic steps to help you get started.
Step 1 - Go back over and review your expenses to find out where your after-tax income has been going. Look at your credit card, debit card and banking activity to classify your spending into some broad categories: housing, groceries, clothes, utilities, transportation, entertainment & eating out, college savings, etc.
Step 2 - List the top six values that are important to you and rank them from top to bottom: family, health, charity, travel, college education for children, comfortable retirement, etc.
Step 3 - Develop six realistic and measurable goals that align to those values. An example of a goal might be to save three years of college expense before your children leave high school.
Step 4 - Now review the six goals you established and compare them to where you are spending. If you find those are in alignment, then you have validated your saving & spending plan. If you find that they do not align then you can make a conscious decision to shift your resources to help achieve your goals.
Putting together a saving & spending plan can be a great strategy to accomplish your goals and develop Financial Security. You should review your progress on a regular basis to make sure you are working towards your goals. Remember that if you find the circumstances in your life change then you can adjust your goals to align to your new circumstances.
This process can also give you the opportunity to identify spending that you might want to review and see if it is still required. You might find that you are paying for services that you no longer use, like an old gym membership that is set up as a recurring credit card charge. If you no longer need this service then cancel it and free up money to go towards your financial goals, or go back to the gym and work on the goal of improving your health. Either way you are now more in control of your spending & savings plan, instead of hoping that things just work out.
If you are looking for a Financial Coach that can guide you towards financial security. Contact Stephen Westurn at phone 214.240.0701 or Stephen@Westurnconsulting.com to schedule a complimentary financial assessment session.
Guiding People Towards Financial Security