Mapping your financial future

Mapping your financial future

Recently a client of mine and his wife called me to say they were struggling with their finances and wanted me to give them some advice as to how best to manage their finances and plans for the future.  I quickly realised at our meeting when we met that the main problem was they had no house hold budget in place and they were just living from pay cheque to pay cheque.   They were a professional couple and had a good income but from our conversation the following stood out:

Failing to plan is planning to fail.

 What is a Budget Plan?

It is a personal written monthly budget that allows you to plan for how you spend and save money each month and also keep a track of your spending patterns.  Though making a budget may not sound like an exciting activity, it may even seem like a scary idea, it is vital to keep your finances in order.

If you spend less in one area you can spend more in another area or choose to save that money for a larger future purchase, building up funds for a rainy-day fund or even for retirement.

At our meeting I recommend to my clients to go on to a brilliant website called www.consumerhelp.ie.  I advised them to go onto a section called “Budget Calculator” where there is a detailed plan to help you with your budget.  I recommend this to all my clients.  This calculator helps you to work out what your spending your money on and compare this with your income.

How to make a budget 

1. Gather every financial statement you can
2. Record all your sources of income
3. Create a list of monthly expenses
4. Break expenses into two categories, fixed and variable
5. Total your monthly income and monthly expenses
6. Make adjustments to expenses to save money if possible
7. Review your budget monthly so as to make sure you are on track

One final tip and one which I use is download a “spending app” on your phone.  This is a very easy way to track your expenses as you are on the go.

Remember “immediate gratification is the determent of future financial planning” so be careful when spending money on big purchases and ask the question do I need or want it.

One final note, when planning your budget try to have a target to save up to 10% of your net income towards your long term financial future.