Jason’s Financial Favorites: The Budget, Simplified

Budget

Jason’s Financial Favorites: The Budget, Simplified

* This article was originally published on October 2, 2019. It has been updated for 2020.

Do you enjoy putting money away for a rainy day, or are spur-of-the-moment shopping sprees more your style? Either way, having a budget to work from can help you make the most of your money and financial future. If you’ve never put a budget together, you’re not the only one. You might even be surprised to learn how many folks don’t have one. In fact, only 32% of Americans budget their income and expenses.

Having a simple yet effective budget can boost your financial confidence and lower your stress levels, and putting one together doesn’t have to be difficult. While you can go all out, I find that there are plenty of simpler alternatives that get the job done. Consider making your income and expense lists with pencil and paper, spreadsheets, or even a smartphone app. When you use your budget to gauge your spending, you’ll know exactly where your money is coming from, where it’s going, and how it’s moving you toward financial independence.  

I’ve seen how simple budgets can help knock out debt, lessen holiday gift-giving stress, and make dream vacations a reality. Because of their versatility, I like to encourage my clients to start with a simple annual budget, broken up by month. This type of setup can help you see your big financial picture while also zoning in on monthly spending habits. There’s no better time than the present to start budgeting, so let me show you how you can start yours and get on track to a healthier financial future. 

Starting a Budget: Show Me the Money!

To start your own personal budget, all you need is a recording process of your choice and access to your financial data. Put simply, you need to know about every dollar you own, even if it’s not in bill form. After all, your assets are often more important than the cash in your wallet. With that being said, let’s start with the most obvious source of money: your income.

Because we’re working on creating a monthly budget, it’s important to know how often you’re paid. Weekly? Bi-weekly? If you’re paid bi-weekly, you’ll notice all months will include at least two paydays, but some could include three. You can use these months to grow your savings, catch up on miscellaneous bills, or put toward your financial goals. Mark down every day of the month that wraps up a pay period. 

Next, how much do you make? If you earn a salary, you should have an accurate idea of exactly how much each incoming paycheck will be. If you’re paid by the hour, are you guaranteed a certain number of hours per week? Do you work overtime on a regular basis? If your paychecks fluctuate, I recommend creating a budget around the minimum amount you can expect. It’s better to have an unexpected surplus at the end of the month than to overestimate your income.

Next, how do you receive your income? If your paychecks go into your account via direct deposit, it’s easier to mark the exact date your funds will be available. If you receive paper checks, you’ll need to include a buffer period between when the check arrives and when it clears. This is important because, if you have bills due before a check’s estimated clearance date, you’ll need to budget for them in advance.

Finally, you’ll want to include any other reliable sources of normal income, like that from rental properties, dividends, or interest. Don’t include potential sources of income, like performance-based bonuses or that long overdue inheritance from Grandma Betty. You’ll also want to make note of your total liquid savings to date.

When you’re done recording your income, you should have a list or calendar that shows you exactly what you have and when you can expect income payments throughout the month. You should also have easy-to-spot reference data regarding your overall savings.

Adding Up Expenses: Wait, I Spent How Much?

This is the part of budgeting that can be the most stressful. It can be daunting to see how many other hands your money goes into. Just remember that it’s easy to make a monster out of the mouse under the bed. Once you face your expenses, you’ll likely feel more empowered and ready to take control of your finances.

According to one survey, two-thirds of respondents admitted to wasting “a considerable amount” of financial resources. Having an exact picture of your expenses can be the best way to get control of debt or find where you can grow your savings or accomplish your goals. Not using that gym membership? Cancel it and apply the saved funds to your credit card payment. Embarrassed by the amount of money you spend eating out? Watch your savings grow as you cook at home more often.

In addition to what you spend monthly, it’s important to include annual and quarterly expenses as well. Even though we’re working on a monthly budget, start by making a list of every expense you have throughout the year.

Start with common expenses, including your:

  • Rent or mortgage payments

    Ready to Create Your Own Budget — but Still Not Quite Sure Where to Start?

    Download the Financial Planning Fort Collins Budget Plan Worksheet to use as your guide.

    And don’t forget that we provide hands-on budget preparation and coaching as well as reimbursement for a YNAB (You Need A Budget) subscription to all Comprehensive Services clients. Not yet a Comprehensive Services client? Schedule your free initial consultation to learn more!

  • Insurance premiums, including auto, health, disability, and others
  • Utility bills, like your electricity, water, and gas
  • Technology costs, such as your cell phone, cable, and internet

You’ll also want to include monthly debt payments and note their associated interest rates. Knowing the amounts due in your biggest accounts and who you pay the most interest to can help you develop a game plan to eliminate your debt. Be sure to include your:

  • Car loan
  • Credit card debt
  • Student loans
  • Personal loans

Then account for the parts of your budget that often fluctuate and those you can adjust as needed. These types of expenses often include:

  • Groceries
  • Gas
  • Clothing
  • Entertainment

Don’t forget about irregular expenses, like:

  • Seasonal yard cleanup expenses
  • Property taxes
  • Vehicle registration
  • Quarterly utility payments, like trash collection
  • School tuition

For these types of expenses, you’ll want to divide them appropriately. For example, you can split your annual vehicle registration payment into 12 monthly payments. Put the money aside each month so you’re not caught off guard when the bill comes in the mail.

Once you have your list of expenses complete, take a moment to analyze it. Where does most of your money seem to go? Are you paying for mainly living expenses, or are you going overboard on entertainment? Are you focused on paying down debt, or is your total obligation amount a shock?

Take time to comb through your bank statements, bill-pay apps, calendars, and credit card statements. Chances are your first attempt at budgeting won’t be perfect and you may forget an expense or two. That’s okay. Add them into your budget as soon as you realize they’re missing.

It’s also not uncommon to be taken by surprise when unexpected expenses arise. That’s why it’s so crucial to have an emergency fund. If you don’t have any reserved funds for emergencies, start building one up now. Adding payments to such a fund to your monthly budget can be the best way to get the ball rolling.

Budgeting Your Savings: Pay Yourself First

In fact, budgeting for savings is just as important as budgeting for your mortgage or car insurance payment. Why? Think of it this way.

You know you need to start working out. You’ve been telling yourself for months that it’s time to get into shape. You decide you’ll squeeze in a workout every night before bed. The first week of your plan seems to go well. You get a little cardio in on Monday and do some weight training Tuesday. You continue making small steps toward your weight loss goal throughout the week. But the next week, you’re too busy on Monday and your Tuesday night plans run late. You don’t get your first workout in until Thursday. By the fourth week, you’ve completely lost motivation and tell yourself you’ll try again another time.

The same thing can happen when you tell yourself you need to start saving. You might start by throwing a few extra dollars in the bank account but, before you know it, you keep forgetting or run out of funds. Having the mentality that you’ll put whatever’s left at the end of the month in your savings likely won’t hold you accountable.

Maybe you’re not saving because you’re not sure what you’re saving for. Set a goal for yourself. If you can’t think of one, start by building up the basic recommended savings, like an emergency fund, and then begin working on your retirement nest egg. You can also start a fund for a vacation home or your children’s college. No matter what you choose to save for, treat that monthly payment like you do any other. Your savings deserves just as much commitment as your groceries or electric bill.

Wrapping Up Your Budget

Got it all down? Congratulations! You’ve started a budget. Now that you can see your finances all laid out, it can be easier to see where you’re overspending, where you can spend more, and how you can reach your financial goals in record time.

Going forward, keep a few final tips in mind. Update the key areas of your budget on a regular basis. A budget shouldn’t look the same every month. Be flexible and update your income and expenses as necessary. If you plan on making big budget changes, ease into them gently. Biting off more than you can chew can lead to abandoning your budget altogether.

Finally, stay in touch with your financial professional who can help guide you and support you on your journey. Budgeting doesn’t have to be a solo endeavor. 

If you have budgeting questions, feel free to try the chat feature at the lower-left corner of this page.

Want to learn more about planning your financial future? You can visit the Our Services page to find the path that’s right for you.

Jason Speciner
jason@fpfoco.com

Jason Speciner is a CERTIFIED FINANCIAL PLANNER™ professional, an Enrolled Agent, and the founder of Financial Planning Fort Collins, a 100% employee-owned and fee-only firm. He is also a member of the National Association of Personal Financial Advisors (NAPFA) and XY Planning Network (XYPN). Since 2004, he has served clients of all ages and backgrounds with unique experience working with members of generations X and Y. To learn more, check out Jason's blogs and see the media he's been featured in.



MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds.
ANNUAL FEE
1.00% of assets under management ($100 per $10,000 managed). Debited from your account(s).
FINANCIAL PLANNING
Strategy:FOCO financial planning services are ongoing, and include unlimited phone, email, web and in-person meeting and consultation time. Pricing is based on the unique circumstances of each client situation. Generally, there is a one-time plan development fee ranging from $500 - $2,000 and a monthly fee of $150 - $500; cancel anytime. Clients utilizing investment management services with portfolios of $500,000 or more will typically receive financial planning services for no additional fee.
INVESTMENT MANAGEMENT
Assets Under Management (AUM)Annual fee as a % of AUM or flat-dollar
$0 - $249,999(See Invest:FOCO)
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 - $2,999,9990.50%
$3,000,000 - $3,999,999$15,000
$4,000,000 - $4,999,999$20,000
$5,000,000 or more$25,000 + $2,000 per additional $1mm
MINIMUM ACCOUNT SIZE
There is a minimum initial investment of $100,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities.

Minimums do not apply to inStream proactive financial planning as a stand-alone service.
ANNUAL FEE
Assets Under ManagementFee as a % of AUM
$100,000 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 or more0.50%

inStream proactive financial planning as a stand-alone service: $1,000/year or $100/month
MINIMUM ACCOUNT SIZE
There is a minimum initial investment of $100,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities.

Minimums do not apply to inStream proactive financial planning as a stand-alone service.
ANNUAL FEE
Assets Under ManagementFee as a % of AUM
$100,000 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 or more0.50%

inStream proactive financial planning as a stand-alone service: $1,000/year or $100/month
MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds. Invest:FOCO is currently available for Individual, Joint, Traditional IRA, and Roth IRA registrations.
ANNUAL FEE
0.65% of assets under management ($65 per $10,000 managed)
MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds.
ANNUAL FEE
0.65% of assets under management ($65 per $10,000 managed)
TAX PREPARATION
Invest:FOCO clients are eligible for a 10% discount on income tax preparation services offered through Fort Collins Tax Service, LLC. This discount applies to the base cost for return preparation as well as Schedules B & D. More details can be found here.
MINIMUM RELATIONSHIP SIZE
There are no minimums when utilizing inStream proactive financial planning as a stand-alone service.

When investment management services are desired, there is a minimum initial investment of $125,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities. inStream proactive financial planning is then included at no additional cost.
ANNUAL FEE
inStream proactive financial planning as a stand-alone service: $1,250/year or $125/month

Assets Under ManagementFee as a % of AUM
$125,000 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 or more0.50%
TAX PREPARATION
Strategy:FOCO clients are eligible for a 50% or 100% discount on income tax preparation services offered through Fort Collins Tax Service, LLC. This discount applies to the base cost for return preparation as well as Schedules B & D. More details can be found here.
Monthly Economic Update
Stay in the loop with our Monthly Economic Update. It's a great way to catch up on the things effecting your financial plan in an easy to read and relatable format.

We promise to only use your name and email address for sending our Monthly Economic Update. We will not sell, rent, lease, loan, or use your name or email address for any other purpose, internally or externally. You can easily unsubscribe at any time.
Monthly Economic Update
Stay in the loop with our Monthly Economic Update. It's a great way to catch up on the things effecting your financial plan in an easy to read and relatable format.

We promise to only use your name and email address for sending our Monthly Economic Update. We will not sell, rent, lease, loan, or use your name or email address for any other purpose, internally or externally. You can easily unsubscribe at any time.
MINIMUM ACCOUNT SIZE
Minimums do not apply to always-on, real-time financial planning as a stand-alone service.

For investment management services there is a minimum initial investment of $125,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. Investment management fees are generally debited from the accounts to which they apply. Financial planning services are included for Strategy:FOCO investment management clients at no additional charge.
ANNUAL FEE
Always-on, real-time financial planning as a stand-alone service:  $125/month or $1,250/year

Assets Under ManagementFee as a % of AUM
$125,000 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 or more0.50%
Five Savings Secrets
Are you 30 - 60? Let us give you a few tips with our free white-paper: Five Savings Secrets. Then stay in the loop with periodic emails featuring relevant information on financial planning, investment management, and income taxes.

We promise to never sell, rent, lease, loan, or use your email address for any other purpose, internally or externally. You can easily unsubscribe at any time.
Notice

This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the privacy policy. If you want to know more or withdraw your consent to all or some of the cookies, please refer to the privacy policy.

By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to the use of cookies.

FINANCIAL PLANNING
Financial planning services are ongoing, and include unlimited phone, email, web and in-person meeting and consultation time. Pricing is based on the unique circumstances of each client situation. Generally, there is a one-time plan development fee ranging from $500 - $2,000 and a monthly fee of $150 - $500; cancel anytime. Clients utilizing investment management services with portfolios of $500,000 or more will typically receive financial planning services for no additional fee.
INVESTMENT MANAGEMENT
Assets Under Management (AUM)Annual fee as % of AUM or flat-dollar
$0 - $249,9991.00%
$250,000 - $499,9990.90%
$500,000 - $999,9990.80%
$1,000,000 - $1,999,9990.65%
$2,000,000 - $2,999,9990.50%
$3,000,000 - $3,999,999$15,000
$4,000,000 - $4,999,999$20,000
$5,000,000 or more$25,000 + $2,000 per additional $1mm
ESTIMATE YOUR FEE
Your fee is determined by the complexity of your needs and situation. The primary proxy we use for complexity is your investable net worth, which is generally your total net worth, excluding your primary residence. Your investable net worth includes the value of cash, bonds, stocks, mutual funds, rental real estate, and other business or financial interests. This aligns with the holistic nature of our comprehensive services. You can use the chart below to estimate your fee based on your investable net worth. In some circumstances, your fee may be more than the minimums in the chart below.
Annual Fee Investable Net Worth (INW)
$4,000 (minimum for an individual)Up to $500,000
$6,000 (minimum for couples)Up to $1,000,000
$8,000Up to $1,500,000
$10,000Up to $2,000,000
$11,000Up to $2,500,000
$12,000Up to $3,000,000
+ $1,000per additional $1,000,000 of INW
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Need some tips to help you tackle your next critical money moment? Stay in the loop with our weekly(ish) email!

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Do you have a cash surplus? Learn more what to do with extra money in the free-preview of our Teachable course: Sudden Money and Windfalls.

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Critical Money Tips
Are you here because of a big change in your finances? Subscribe for our PDF on 6 questions to learn the benefits of working with a full-time fiduciary.

We promise to never sell, rent, lease, loan, or otherwise use your email address for any reason inconsistent with our privacy policy. You can easily unsubscribe at any time.
Inheriting Money Can Be Overwhelming.
We have the expertise to be your guide as you navigate receiving a windfall.
Equity Compensation Can Be Confusing.
Let us make it less complicated for you. Whether it’s a one-time award or ongoing compensation, we know how to help.
ESTIMATE YOUR FEE
Your fee is determined by the complexity of your needs and situation. The primary proxy we use for complexity is your investable net worth, which is generally your total net worth, excluding your primary residence. Your investable net worth includes the value of cash, bonds, stocks, mutual funds, rental real estate, and other business or financial interests. Our transparent pricing aligns with the holistic nature and value of our comprehensive services. You can use the chart below to estimate your fee based on your investable net worth. In some circumstances, your fee may be more than the minimums in the chart below.
Annual Fee Investable Net Worth (INW)
$4,000 (minimum for an individual)Up to $500,000
$6,000 (minimum for couples)Up to $1,000,000
$8,000 - $12,000$1,000,000 - $3,000,000
+ $1,000per additional $1,000,000 of INW