|
Personal Budgeting |
OUR PHILOSOPHY
Like other areas of our business, our approach to personal budget is to utilize proven and respected research and best practices, while leverage technology and automation. Study after study have shown that people who have a budget plan do better financially, and those that stick to their plan do even better. Have you ever tried to stick with the latest diet or exercise craze that involve very particular details (e.g. calorie counting, food restrictions, or an exact order of things)? Were you able to stick with it (no, not for a week or even a month, but a permanent change to your life)? If so, please stop right now and give yourself a round of applause - you are someone I have never met; I didn't think you even existed. For all of the rest of us, what tends to work best are systems that nudge us in the right direction, or even better, automate our choices towards things that support our goals. With that in mind, we have shared below several of the high-level approach we use in advising our clients and creating a customized personal budget that aligns with their overall goals.
AUTOMATE BUDGETING
THE 50-20-30 MODEL
Investments
Like other areas of our business, our approach to personal budget is to utilize proven and respected research and best practices, while leverage technology and automation. Study after study have shown that people who have a budget plan do better financially, and those that stick to their plan do even better. Have you ever tried to stick with the latest diet or exercise craze that involve very particular details (e.g. calorie counting, food restrictions, or an exact order of things)? Were you able to stick with it (no, not for a week or even a month, but a permanent change to your life)? If so, please stop right now and give yourself a round of applause - you are someone I have never met; I didn't think you even existed. For all of the rest of us, what tends to work best are systems that nudge us in the right direction, or even better, automate our choices towards things that support our goals. With that in mind, we have shared below several of the high-level approach we use in advising our clients and creating a customized personal budget that aligns with their overall goals.
AUTOMATE BUDGETING
- Automatic transfers to pay bills, invest for retirement, etc.
- Setup all bills to be paid by credit card and those that can't be paid by credit should be setup to be paid by ETF (automatic withdrawal from a checking or savings account)
THE 50-20-30 MODEL
- Start your budget planning with this model, and then adjust based on personal priorities
- 50% Mandatory Expenses (loans, credit cards, mortgage/rent, insurance)
- 20% Investments
- 30% Guilt-Free Spending
Investments
- 10-15% of income towards retirement
- First, max out 401(k) match from employer
- Next, max out Roth IRA
- Emergency Fund
- Start by saving $1,000
- Work up to saving 3-6 months of expenses
- Increase your emergency fund up to no more than 12 months if you have higher income or inconsistent income
- Other savings goals
- Children's education
- New vehicle
- Mortgage down payment
- Vacations
- Anything else you want