The Benefits of Budgeting

In my experience, budgeting has always had bad press. Talking about budgets can make people feel uncomfortable, perhaps because it is something they feel they should be doing, but would rather not.

Years ago, when I was a mortgage adviser, clients completed a budget plan as part of the process so both they and I could feel confident their monthly mortgage payments were affordable in addition to their lifestyle costs. To this day, I am fairly sure many plans were completed by clients who underestimated the cost of their lifestyles.

Now, working as a financial planner, an ‘expenditure’ questionnaire (otherwise known as a budget plan) is completed so we can ascertain what true lifestyle costs might be. This helps us build financial plans to assist our clients live their life without fear they will run out of money (or die with too much).

However, I still often see these expenditure questionnaires completed using conservative figures.

In both cases, using conservative figures can be dangerous as in effect we could be storing up trouble in the future if lifestyle costs do turn out to be higher.

The critical point here is to create an awareness of where we are spending our money. With this awareness we can plan, we can adjust, we can work pro-actively. Without awareness we are blindly stepping into our financial futures and hoping they will be ok.

Budgeting can be seen as a negative process and it was once quite hard to do but these days there are so many options available to help us from the free tools offered by some banks to paid for apps – what they look to do is remove the pain of collating the data so we can see results quickly and easily.

With inflation running as high as it is at present there has never been a better time to have a good look at where we are spending our money.

There is an old saying that the cheque book and the calendar show what we value (by showing where we spend our money and our time).

Modern day budgeting can create the same clarity and we could use this to improve the quality of our lives.

So why not approach budgeting from a positive perspective…

As a financial planner, I have found that when people know where they are spending their money AND they have a plan this creates a great deal of reassurance. At times like this, this is very valuable indeed.

Warm Regards


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