New Year's Budgeting Resolutions

By Rob Wrubel, CFP^®

Once again, the health facility where I work out has been busier than usual the last few weeks. The holidays have passed and many people look to get the extra cake and cookies out of the diet and the extra pounds off of their bodies.

Financially, many people looked to tie up loose ends as the year came to a close and promised to do better in the new one. Resolutions included saving more, spending less or just plain taking a look at the checking account every so often. Budgeting resolutions are part of the New Year’s rituals—easy to promise and so often hard to keep.

As a financial planner, I have seen many people with different levels of budgeting desire and skill. One family I know has the envelope system down and tracks every penny through this manual process. Another family has a monthly summit where the husband and wife get together and review the past month, the coming month and the values of their savings and investment accounts.

Most families I meet with do not budget. Often, the income is sufficient to meet their monthly needs, additional expenses that arise and enough to create a fund to pay for vacations, gifts and bigger items that come up during the year.

Many times, I meet with people who are on the edge. They have more credit card debt than they desire, are not saving for their own retirement, education, special needs trusts and other important, but not daily, expenses. Generally, I do not get calls from people deep in the hole wondering if they can even meet basic needs as my work does not include detailed planning for debt relief or bankruptcy.

Here are a few tips to make your spending and saving life a little easier to start and stay with during the year.

1.  Understand your motivations. Families with a special needs member have significant, important reasons to improve their overall financial picture. Often, the future quality of life of our family member with a disability depends on us to have a working, fruitful financial plan. Knowing the passionate and emotional reasons you sit down to review your finances each week will help you stay on track.

2.  Visualize success. Why are you even taking the time to budget? You have an outcome in mind different than the one you are living now. That outcome might be to reduce financial stress. It might be to retire early or to take care of your special needs person. Most likely, there are several life and financial outcomes you desire. Write them down. You might want to write them on index cards, a notebook or change your screen saver to your desired outcomes. Find some way to repeat everyday what you want. This repetition helps change your attitude from fear to fulfillment. It helps keep your goals and dreams front and center as you go about your daily life.

3.  Educate yourself. You have numerous resources to help you determine your financial needs. Financial planners help put savings and investing plans in place—ask them for thoughts on where you are today. Libraries are packed with books on getting out of debt, saving and budgeting. Open yourself to joining a class or group focused on understanding money.

4.  Review your personal money messages. Many of us walk around with money messages that are no longer relevant to the people we are today. Some parents encourage responsible money habits—most do not. Talk to therapists, advisors and others to help you understand your attitude about money. Become empowered about making financial decisions that benefit you.

5.  Learn to use financial software. There are so many options today to choose from to help you understand where your money comes from and where it goes. Learn the basics of Quicken, Microsoft Money or a tool available from your bank. Even a simple Excel spreadsheet can change the way you have access to past spending habits. Knowing where your money goes gives you a fantastic framework to make real decisions about changing where you want it to go. Did you spend 25% of your income dining out? Saving a portion of that each month can add up to real savings. Is your mortgage too high relative to your income (there are certain suggested ratios)? If so, maybe a move is in order. This can all be done with a pencil and paper—a tracking tool that downloads from your bank and credit cards is much easier.

6.  Learn to talk with your significant other. If you are married or in a serious relationship, you need to make financial decisions together. The support you have for each other will help you down the road. Of course, the opposite can often be true and people use spending as a way to damage their relationship. Find a good therapist to work through family communication issues if need be.

This is the time of year to make powerful, positive financial decisions for your family. The slate is clean. Excitement for change is still in the air. Twelve months from now you will not have to make yet another resolution to save more, spend less and take control.

Call me if you need help with investment management, financial planning and goal setting. My mission is to help families with a special needs member realize their lifetime goals and achieve financial freedom.

Rob Wrubel, CFP® is a Senior Investment Consultant with Cascade Investment Group, member FINRA & SIPC. Cascade Investment Group is not a tax or legal advisor. You should always consult with your tax advisor or attorney before taking any actions that may have tax or legal consequences. Call Rob Wrubel at (719) 632-0818