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Budgeting

FINDING YOUR BALANCE

We can help you do more with what you have

One of the first steps in the financial planning process is figuring out how much you are spending and on what. Budgeting is a task that no one enjoys doing but it really is an important thing to do. To create a budget you start by looking at your past expenses and categorizing each of the expenses. once you have an idea of how much you have been spending you can adjust it for how much you would like to spend on each category going forward. Budgets need to be realistic but also flexible enough to account for changes that occur from month to month. Here are some of the tools Townsend Financial Life Management offers to help you keep track of your spending and create a budget for yourself.

STEP 1 Pull your Past Spending

The first step in putting together a budget is to see how you have been spending in the past several months. Usually it is a good idea to pull the last year's worth of spending so if there are any large expenses that do not occur every month, you can be sure to include them in your budget.

Step 2 Categorize your Spending

Many of the banks have programs available on their website to automatically categorize your spending and show how much you have spent each month. This may be a good start but the banks often mis-categorize some of the transactions or double count things like paying credit cards at the same institution.

STEP 3 Create your budget going forward

Take your past spending and create a budget for future spending. The key to this is to be realistic with your budget. You can plan to make changes to your spending habits and budget less on certain things to make room for others but you need to make sure they are realistic.

STEP 4 Track your Spending and Adjust

After you have your budget together, track your spending from month to month and see how you are doing. After a few months, you may notice you didn’t allocate enough to one area or you may have extra money you didn’t realize you could be saving. Don’t get discouraged if your spending isn’t exactly what you budgeted. Keep in mind that a budget is a guide to help you choose where you are spending and help you trim unnecessary expenses.

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