Budgets aren’t about scarcity, they’re about potential. Making the right spending decisions will help you fund the future you want, whether it's a secure retirement, paying for your children's college expenses or traveling the world.
Not all expenses are necessary
Seeing your monthly expenses will help you decide whether to save more toward your future goals. It may help to view spending based on needs, wants and wishes.
- Needs: Food, housing, childcare, utilities, transportation
- Wants: Entertainment, vacations, clothing, club memberships
- Wishes: Charitable giving, second home, gifts, leaving money to your loved ones
Set your starting point
Balancing immediate versus delayed gratification often makes the difference between reaching your long-term goals or falling short. Investing what you don't spend allows your money to work for you, so it's critical to get your spending right.
Ask yourself, "How much money do I need now, how much will I need later, and how much will I need in the future?" A Financial Advisor can help you quantify your current and future expenses.
Once you know how much you need and where your money is going, follow the "pay yourself first" rule of savings – automatically invest a specific amount from your budget for the future, such as in a 401(k) or other investment account.
How to make a budget
Add up your income and spending. Income includes wages, pensions, Social Security, payouts from a trust, rent you may be collecting, divorce settlements, or investment income such as stock dividends. Your credit, debit and bank statements will be helpful in showing you where your money is going.
Use this simple worksheet to take the first steps toward creating a budget, or updating your current budget.
Talk to your partner
Starting a conversation is an important money move, and sometimes we just need a little help getting started.