Spending Plans

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The word “budget” is perhaps the only four-letter word that has six letters. That is why I don’t do budgets with my clients. We figure out spending plans instead. And each spending plan I help to draw up is as unique as the person it is tailored to.

However, no spending plan will succeed if you don’t know where your money is going. 

If you are still in the process of becoming digital, I highly recommend adopting Quicken or similar software for your accounting needs. With Quicken, you will see a built-in method to categorize each check, debit or deposit. Using a customizable drop down menu – with “auto complete” – you won’t even have to type the whole word out!

Some basic categories include:

  • Medical expenses
  • Household expenses, including maintenance and utilities
  • Professional fees (Accounting, Legal)
  • Tax-related expenses
  • Capital expenditures

It’s usually at this point when my clients ask “Doesn’t my credit card categorize everything for me?” It is true that credit card companies will often give it “the college try” to categorize your expenses for you – but it is important to remember that they weren’t with you in the store.

When American Express attempts to categorize your purchase, it is often done merely by the name of the store. So if you visit Les panatalons fancies what will that show up as?

With accurate, human-entered and human-verified data serving as the backbone of your fiscal self-awareness, you will be able to accurately evaluate your current spending and then set goals that are realistic for your long-term financial objectives. With Quicken, you can track your progress.

Cash transactions come with receipts, too, and categorizing them does not have to be a chore! Remember George Costanza’s wallet? He could have avoided that backache if he had simply entered his cash receipts into the computer every week.

Categorization is key. Without it, saving for retirement would be more of a game of guesswork than it already is. With it, you can anticipate market forces and understand your own fiscal limitations, so you can sip the wine you worked so hard for in the vineyards, sans souci.

Judith HeftJudith Heft, Principal, Judith Heft & Associates is a personal financial concierge with offices in Greenwich and Stamford. She can be contacted via email at judy@judithheft.com or by phone 203-978-1858.

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