Lose the Weight

Lose the Weight

The top New Year’s resolution, according to USA.gov and the Journal of Clinical Psychology, is to lose weight, but what about trimming down in other areas of our lives?

In financial planning one of the most important “levers” or tools available to improve the strength of a financial plan is a reduction in living expenses. A low-expense plan that can be fully covered by guaranteed sources of income (like Social Security and pension payments) is generally a very strong one. The validity of the plan results is lost, however, without an accurate living expenses figure. This makes it crucial to a financial plan and demands time and effort to better understand.

Anecdotally, we have noticed most people have a very clear idea of what they make, but little clarity around how much they spend. An estimate can be calculated by reducing gross income by annual savings, taxes and other required deductions (like Social Security, Medicare, State Unemployment Insurance and State Disability Insurance). This is a helpful baseline, but to get a more detailed look and determine where to trim, further dedication and examination is required.

The tool we use, the Bell Budget Worksheet, assists with tracking by separating expenses into broad categories including personal, child, recreation, medical, home, etc. Within each group the expenses are sliced thinner. For example, clothing/accessories, club memberships, magazine subscriptions, personal care (hair/cosmetics) can all be found under the category, personal expenses.

Although not a small amount of work, the process can be extremely useful and eye-opening. Generally participants focus on discretionary spending, but fixed expenditures should not be ignored as possible areas for reducing costs. Refinancing or downsizing can have a dramatic impact on the strength of a financial plan.

If you are still searching for a resolution or simply some motivation, why not make this year the year to improve your financial health? Speak with your Certified Financial Planner™ today to review spending and lose the weight.

❯ Register for the February 4 Lunch & Learn “How to Make Your Life Work Financially”. Find out how you can maximize cash flow while minimizing risk and the importance of financial planning for your financial success. For inquiries and/or reservations email Jaye Roundtree.

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