Budgeting Stinks. So Don't.
Think of your budget the same way you do your diet.
When most people hear the word budget, they think of boring weekends, ramen noodles, and sitting at home in a tiny, bare-walled apartment. No eating out, forgoing the good coffee, and endlessly clipping coupons. It sounds as dreary and unsustainable as the cabbage soup diet. Well, that's because it is. I'm a pretty frugal person, and that even sounds stressful to me!
What I see most people do when they go on a "budget" is what I like to call "money dieting." It can help for the short term, but it usually leads to burnout. And, just as many crash dieters regain whatever weight they lost, many budgeters end up splurging on something they can't afford with a credit card or money from savings, thus undoing whatever progress they made.
This short-term, crash-diet approach doesn't work, folks. When it comes to your money or your health, you must think long-term. So what do I usually suggest when looking at people's spending issues? The key for us as financial planners is to look a client's budget the same way a personal trainer does a client's exercise regimen: you don't work out for a week and then quit, any more than you budget for a week and then splurge. I'll take a look at my client's current lifestyle, make small, sustainable changes one at a time, organize, and create a plan for one, five, and 10-plus years out. I also counsel my clients about why I'm making these recommendations, and what benefits they'll see at each life stage.
One unique thing we do at Family Financial Partners and FeeForPlan.com is our customized planning checklist. Each client receives an easy-to-read checklist, broken out by short-term, mid-term and long-term goals. We know very few people are willing to tackle a 30-item to-do list. Fitness experts know that no one is going to completely revamp their diet, start hitting the gym five times a week and cut back on booze all the same week. So what do they do? Help their clients make one change at a time. After that becomes habit, make another change, and so on.
For the people I work with, if that change is to put a extra $100 a month to get the credit cards down to a reasonable level, then that's what we focus on. Then start putting an extra $50-$100 towards savings. The key is to make small lifestyle adjustments that are permanent changes for a better life, not temporary quick-fixes that will make the problem worse long-term.
One thing we say over and over again in our office is that we help people organize their financial lives. Boiled down to one sentence, it might sound overly simplified. But trust me - one of the biggest keys to financial success is organization. Too many people don't know what they are doing with their money, why they're doing it, how much they spend a month, the balance on their mortgage, you name it! Why? Because it's easier to go through life on cruise control than to take an active and organized role in your own life. In short, it's laziness. But, I've seen time and time again that organizing your finances usually makes life MUCH easier - on yourself, your spouse, loved ones, and for the you of 20 or 30 years from now.
Becoming a financially savvy person isn't that all hard. Our team is here to offer guidance and be the expert you need to guide you. We'll help you automate so you don't have to remember to make transfers and pay bills, and we'll hold you accountable to the goals you set with us.
Motivation is temporary, but determination continues on. When you organize and regularly review your whole situation - whether your health or your money - you can make small adjustments to help stay on track. You're not going to lose weight overnight - just ask our Senior Partner David Smyth, who's lost more than 100 pounds since making small, sustainable lifestyle changes over the last three years. (Yes, we're very proud of him!) The same goes for your finances. If you start now, you could be in a much better situation in just a few years. No ramen necessary.