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Fortuneline Financial Blog :

Thinking of a Personal Budget?

If you simply google the term Personal Budget, you will get over 1700 Million results. Needless to say, there is plethora of information out there about the personal budget topic itself. When it comes to the means and tools for planning your budget, there is no one size that fits all. I have based this article on Quicken, but it is just my personal preference. I would like to share some tips on When to do a budget? Where do I find the information? and How do I ensure success?

 So, let us take the first two topics, when do you actually plan for a budget and where do I find the information?

Most of our lives are pretty much programmed to follow a certain sequence of events that are dictated by others for the most part. If you have kids, their School Calendars, Sports and Extracurricular activities, could take a sizeable amount of your time outside of work. If you are a social butterfly and stuck on social media, I feel for you.  In short there is no time to set aside and plan for an elaborate budget with all the information that is needed to even baseline a budget. What I have found over the years is a personal financial software such as Quicken can play a huge part in baselining some of the information that is needed for a good personal budget. Even if you have never done a budget before, Quicken tracks all your spending and income by categories, tags and payees. So, around the Thanksgiving Week, I start downloading the annual spend for the family. I do not question, adjust and balance categories, just stay stick to the facts on where the money comes in and where it goes. This is my baseline information. Quicken has a great personal budget template for importing this baseline information to kick off your budget planning for the upcoming year. I then set aside about one hour each weekend for the next five weekends between Thanksgiving and first week of January to review and think through the budget plan making cuts or increases based on gut feel for the upcoming events during the course of the year. You will be surprised how much our life follows patterns. This cyclical milestone process gives me enough time during the Holidays to sharpen the budget and roll it in time for mid-January. 

Once the heavy lifting of planning and setting a baseline budget is done, how do I ensure success ?

I have found it useful to communicate with your family members about your goals. It also helps to make it a fun quiz “Did you know… we spent just X Dollars on Entertainment this year ? if you check it is lower than most average families. Great going ! The idea is to give the members of the family a sense for financial spending this year and the sacrifices needed.

I usually monitor the spend on a monthly basis to see if there are any significant gaps between what I have planned and what we are actually spending. Once again, I have found the reports on Quicken very helpful in analyzing the gaps, both positive and negative. Things do come up, out of the blue sometimes and can rock your entire budget. You cannot expect yourself to do great in your first attempt, so be patient with yourself. It takes a few iterations and years before you come close to managing a tight budget. It also takes commitment from the entire family to stay focused and on track, so feedback is invaluable in ensuring things stay on track. If you do start slipping through the middle of the year, and your variance starts to come close to 10% or higher, it is time to revisit and start rebalancing in major categories so you can land the final numbers to your original plan. That does not mean you have to completely skip out on that vacation plan, but may be consider something closer to home or a staycation to build those memories that enrich our life. Time flies when you are having fun, I am always surprised how quickly November comes around. If I can stay within +/- 10% of my budgeted plan by the end of the calendar year, I feel a small sense of achievement for myself and the family.

I will admit, planning, implementing, and monitoring budgets is not an easy task but once you commit to this fiscal discipline the peace of mind that comes with having a budget far outweighs the pains that are caused by not having a plan. Once again, if you are just starting; there is plenty of information out there about tools, templates, books and articles on this topic. If you are still overwhelmed with too much information, you could speak to a Financial planner that can get you started on the right foot.

Thinking of a Personal Budget?

Pallavi Shirke CFP©
Certified Financial Planner

Thinking of a Personal Budget?

As a CFP® professional I am trained to help you develop a comprehensive strategy to reach your short and long term financial goals.
Contact me today for an initial consultation and find out more about how we can work together. I look forward to helping individuals and families like yours protect and grow their assets.

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