Putting together a budget is an extremely helpful tool for someone trying to get their financial house in order. During the process, they can find out what expenses are necessary, what expenses aren’t and what expenses they should start to incur.
Prepare the Budget with an Advisor
I recently sat down with an opera singer who is a friend of mine to go over her budget. For some time she’s had the feeling that she was making a pretty penny but didn’t have anything to show for it.
During the review we were able to determine that certain bills had to be paid. They included rent, car, power, medical insurance, student loans, retirement savings and a number of other necessary bills.
Know the Goals and Outcome of a Budget Review
Now part of the reason that she wanted to go through the exercise was to determine how she could set aside money for simple savings for a rainy day but also carve out a portion of her income for continuing her opera lessons.
With this review we also came across expenses that where secretly and subtly draining her pocket book. Namely food. This included not only the food that she bought for the home but also what she spent every day for breakfast, lunch and dinner. It was adding up.
On top of those expenses she noticed that going out with her friends was hurting her finances. She realized that she was spending too much going to dinners, movies, and generally hanging out with her friends.
Do What the Budget Plan Recommends
Now to be fair, the review was not designed to say that she should stop doing what she was doing all together. It was however designed to let her know where the challenges where and how to fix them. Namely watching what she buys outside the home for lifestyle.
This part of the review is critical. Once we identified what needed to be done she needed to do it. This is not to say that she won’t spend a little extra here and there but she needed to follow the plan to make it work. That way she can achieve a healthy financial balance in her life.
Putting together a budget with a financial advisor can go a long way in getting ones financial house in order. They provide independent, expert eyes that can look at the finances of their clients and determine what the best use of money is and where they can make improvements.
Kolonji Murray - Kolonji Murray is President of the financial advisory firm Murray Wealth Group in New York. Prior to starting the firm in 2009, he worked ...
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