Monitoring the “speedometer” of your financial plan

You receive a late night call from your son or daughter. They’ve taken a short cut on the way to visiting you, but they’ve run out of gas and they’re lost.  You want to help them, but first, you’ve got to figure out where they are.
It’s a situation that reminds me of how a lot of my financial planning engagements begin. Simply by seeing a financial planner, my clients have started on the right road to meet their financial goals. They know their assets and their liabilities, but when I ask them how much they are spending, they’re lost.  While many financial planners are not interested in helping their clients with budgeting, I want more for my clients. That’s why I ask for more, like how much they spend a month at the grocery store, or at their favorite restaurants, or at the nearest gas station.My clients and I understand that spending is the foundation of the financial plan. So whether we decide to begin the plan and to monitor spending in the future, or we begin by analyzing past spending, I find using tools that will track spending invaluable for making sure you know your exact budgeting location.

I prefer a tool that is computer based, rather than hand entering expenditures and manually tabulating the totals. An online or desktop application can integrate with online banking. I want it to be easy for my clients to enter the spending information and easy for them to determine if they are on track with their budget. In addition, here are some of the features I look for in budgeting software:
•   Allows you to enter a budget and compare to actual spending.
•   Allows you to track cash, checking accounts and credit cards in one place.
•   Has the flexibility to create new categories.
•   Will allow you to download transactions directly from the bank.
•   Will auto-complete the manual entry process, i.e. When you enter   “Whole..” then Whole Foods with the groceries category appears.
•   Offers bill pay alerts.
•   Looks like a conventional check account register that you can reconcile.
•   Allows you to search by category or payee.
If you are getting your spending organized and in line with your personal goals, then you might want to take a look at Quicken or Clear Checkbook.  Clear Checkbook has the benefit of letting your financial advisor review occasionally. This advisor sure likes that feature.
Budgeting isn’t always fun, but it is a necessary part of a plan which allows you to set and reach financial goals. With a clear picture of your spending your advisor can determine how much you need to save to reach your goals.  Perhaps you want to retire comfortably, send your kids to college or buy your first house. It all begins with a budget and a savings plan.
Want to insure that you meet your financial goals? First, start with a financial plan that optimizes and integrates the impact of all your financial choices.   Then monitor your progress regularly with an independent hourly financial planner. Tracking your spending is your best personal investment in securing your financial future.

Leave a Reply

Your email address will not be published. Required fields are marked *