What comes to your mind when you hear the term “budget”? Limits and constraints are often what people associate with. A budget allows you to take control of your spending. A budget can help you align your spending with your values, and help you achieve all your goals.
A budget can help you see where your money is going and what progress you are making towards your goals. A budget will help you see where your spending is and how far you’re making toward your goals.
Do you want to try budgeting? Maybe you have an unutilized budget that is collecting dust in a drawer. These four steps will help you make budgeting easier.
- Get Your Tools
Depending on how detailed you need, multiple tools could be used. You can, for example, record your budget in a spreadsheet and keep track of it using a budgeting application. It is important to choose the tools that you enjoy using.
- Choose Your Preferred Method
Budgeting can be daunting because there are so many options and levels of detail. Keep in mind that even the most detailed budget can be overwhelming if it doesn’t work for you. Edward Jones suggests more detail, but if you are more inclined to stick with a more detailed budget, that is okay too.
- The simplest: Keep track of your after-tax income. We recommend that you only use two categories: income or expenses. Keep track of your after-tax income and then record your expenses. This process should be repeated for several months in order to include expenses that aren’t routinely occurring, such as taxes and car insurance. This is the minimum budget we recommend. Although having an overall view of income and expenses can have benefits, it can make it difficult to adjust your budget because you don’t know where your money goes. You can get more detail about your spending to help you adjust and achieve your goals.
- Get more detail. Track your expenses using large spending categories. Separate your expenses into large categories like discretionary and necessary spending. You must pay essential expenses such as groceries, a mortgage, or a car payment. You can make discretionary expenses, such as going out to a movie or eating at a restaurant. You will need to be able to identify what you are spending.
- Track the most detailed categories. This allows you to categorize expenses by type. Budgeting might be a way to allocate money for different parts of your spending like housing, food and entertainment. You could even divide your food expenses into grocery, restaurant, and fast food. This process can be repeated for each section until you have accounted all of your past and expected expenses.
- Make Adjustments
You can make small adjustments to your budget that will help you stay within your budget and grow your wealth.
Align Your Expenditures With Your Values
You will want to ensure that your spending habits align with your values. You should question whether you should continue to pay for a subscription that you aren’t using or buy things that you don’t really value.
Cut Down On Expenses Wherever Possible.
You can reduce an expense if you cannot eliminate it. You can choose generic brands, compare prices on homeowners/renters and car insurance (without sacrificing coverage), or refinance your home.
Budget overlap can be reduced. You might consider reducing the number of subscriptions to video or music streaming services that you already have.
Alternatively, you might consider substituting a more costly option for a cheaper one. Consider eating out at a restaurant that offers casual dining or less expensive food. You can also try something completely different like a picnic.
- Review, Review, Review
The first step in establishing a budget is to start. You can check back every now and again to make sure you are staying within your budget or to adjust as needed.
Don’t be discouraged if you exceed your budget. To determine if you should adjust your budget or spend more, review each category. This is where your financial advisor can help you.
Budgeting is, to us, the foundation of a financial strategy. Make sure to set aside some time soon to create or refresh your budget. This will allow you to keep your money in good shape.
This post was written by All Seasons Wealth. At All Seasons Wealth, we provide expert advice and emphasize the importance of creating in-house portfolios to personalize your strategy for asset management, financial planning, and cash management. We utilize research and perform market analysis to provide you with the top financial advisors in Tampa. No matter your needs, we can work with you to develop a consulting solution tailored to you.
Any opinions are those of All Seasons Wealth and not necessarily those of RJFS or Raymond James. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Past performance may not be indicative of future results.