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Your Relationship with Your Money

Kim ButlerOne of the first topics you might anticipate in a discussion on managing your personal finances is understanding your relationship with your money. While no one likes to discuss that taboo word ‘budget’, knowing your personal cash flow is very important. During our discovery meetings, one of the first things we ask clients is how much they spend each month. Subsequently, we have had many clients who, after tracking their cash flows, were surprised at how much they actually spent for items such as pet care or dining out.

What it comes down to is recognizing the math behind what you bring in per month versus how much you spend. We know an advisor who only works with multi-millionaires, yet he provides each client with a notebook and requires them to track their exact spending for two months. It drives home the point that our relationship with our money is real and not abstract.

You do not have to use “Quicken” or track your spending down to the last penny, but you should have a good idea of where your money is going. You should also be able to identify your survival budget for essentials compared to lifestyle spending for luxury items. Knowing exactly how much you pay out each month can show you where you might have extra money to save or spend to better meet your priorities.

So think ahead, start now, and be prepared for us to ask you about your monthly cash flows (notice I did not say budget!).  If you would like a Spending Plan adapted from the Financial Planning Association, e-mail me at kim@apcm.net and I will be happy to send you the spreadsheet.

 

Kim Butler
Associate Financial Planner

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