Do You Need More Than A Budget?

You’ve made the decision. No more sitting on the sidelines and thinking about your debt and savings crisis. You’ve decided to start anew and tackle these issues for good. As you consider how to overcome the challenge ahead, you may wonder what help is needed to get control of your finances. While some might consider simply purchasing a budgeting app, the reality is that most people also need the help of a financial counselor. Let’s dig in to understand why.

​You Need A Budgeting App

If you’re ready to tackle your debt and start saving for your goals, a budgeting app is a great place to begin. It provides a clear, honest view of your finances each day. With a budget, you know how much you can spend, so you make smarter choices and avoid overspending. Here’s how to get started:

​1. Connect your bank accounts to the budgeting app. When you setup your budgeting app for the first time, it is best to connect all of your bank accounts before you begin the budgeting process. The more accounts you can connect, the more complete your financial picture will be, which provides a better context for your savings goals and spending decisions.

2. Determine how much income you make in a given month. Income planning can often be tricky, especially if you get paid bi-weekly or on commission. This means that every month might look a bit different for you. Consider using your monthly average (or lower) as a basis for planning your budget.

3. Create your budget categories. Budget categories can also be tricky. Some people will nerd out and create 200 budget categories. However, you don’t really need a separate budget category for each grocery item! Try to keep it simple. Lay out each of your fixed expenses (mortgage, insurance, utilities, etc.) and create broad categories for your variable expenses (food & dining, fuel, auto maintenance, etc).

4. Start tracking. You’ve created your budget categories, but unless you start tracking your expenses, your budget won’t be realistic or achievable. Add new categories as they become available and delete ones you don’t need. At the end of the first month, review all of your data, and set the budget for the next month using your app’s information.

You Need A Financial Counselor

Budgeting is pretty straightforward, and most people get the hang of it after a few months. Still, building new money habits often takes some outside support, not to mention the sometimes confusing and frustrating experience of using the budgeting apps. That’s where a financial counselor comes in. Here’s how they can help:

​1. Income planning. A financial counselor can help review your income and ensure that you are maximizing your income in your given employment situation. This includes reviewing deductions and withholdings to ensure they are appropriate. Once your income is understood, a financial counselor can help you determine the monthly income you should use for your budget. This is particularly useful if your income does not perfectly align with a calendar month, such as receiving bi-weekly or commission-based paychecks.

2. Expense planning. A financial counselor can also help you determine the appropriate budget categories to help you navigate your unique financial situation. For some clients, having more categories is helpful to gain control over spending, while for others, fewer categories make more sense. And rarely are the default app categories functional, which can lead to frustration early in the process. The financial counselor can walk you through the process and ensure you’re app is tailored for your situation.

3. Accountability. A budgeting app is a valuable tool to help you manage your finances effectively. However, if you have a problem with not using it or using the information to make spending decisions, then the app won’t help you. A financial counselor can help you work through the deeper issues and struggles and assist you in changing your habits towards better money management. If you’ve been handling money poorly for a long time, most will require outside help to change their habits and behavior.

Get Started Today

With fall here and Christmas coming up, now is a great time to start working on your finances. There are plenty of budgeting apps to help you get started. While budgeting itself is simple, having a trusted financial counselor by your side can make a big difference in the long run. Use both a budgeting app and a financial counselor as you work toward better financial health.