Building Wealth: Creating and Maintaining a Lifestyle Spending Budget
By John Stanton
Inflation came down last year, to a recent 3.35%, year over year, increase in the price of goods, services, housing.
Even so, average costs for everyone, working, and retired, are up close to 20%, over the last 3 years, and are not coming back down.
Consumer Price Index, Year over Year Change Source: Macrotrends
Reviewing your average monthly spending, is the first step gaining control, improving your savings, help plan for retirement, or other future goals, and keep debt manageable.
How We View Budget Planning: Its all about Lifestyle!
Our planning process focuses on your lifestyle goals – what it costs now, to fund your current lifestyle
To simplify, no need to be exact, just develop an estimate of the larger expenses to start.
Start with the Essentials
Needs are not discretionary and include shelter, food, utilities, and insurance, to name a few.
Review your checking account, or credit card statements, and average what your costs have been over the past 2 months for food, insurance, shelter. Those costs probably will be pretty consistent over the next 12 months. For utilities, do the same, but also review your per unit cost of supply. There may be an opportunity to shop the sources of supply, a task I am at the moment doing.
Also for families with children, the kids expense line item is a big one. Includes education, activities, clothes, etc.
Wants, Part of Living the Way You Want
Wants are negotiable and involve dining out, travel, hobbies, or club memberships.
Review what your costs are for these currently. Many have also gone up considerably. Restaurants and eating out stand out.
Consider Large One-Off and Annual Expenses
Family vacations, unforeseen emergency medical out of pocket expenses, and other unexpected expenses can potentially derail your budge if not accounted for.
Review what you spent in these areas over the past year, what your plans are for the coming year, ie the annual family vacation, additional travel, replace vehicle, etc.
Total up the costs, and divide by 12. We suggest putting this amount away monthly, in a savings account, so the funds are there when they are needed.
Review and Revise
Like everything in life, things change from year to year, sometimes day to day. Regularly review your spending, ideally monthly, at least every other month. Be open to making changes, adding or removing categories, or even adjusting budgeted amounts, based on the actual expenses occurring.
Sample Lifestyle Living Expense Worksheet
Here is a sample of the worksheet we use to work through with clients. As you can see, it does not have to be complicated, down to the penny, expenses.
If you would like, we can send you a copy. Use our contact form to request our Lifestyle Living Expense Worksheet. https://www.stantongwp.com/contact
Or, schedule a 15 minute call with me here. https://calendly.com/jstanton-1/strategy-call
John is the founder of The Stanton Group WP. With more than three decades of experience in the financial services industry, he serves as an advisor for clients, focusing on financial planning and the investment strategies to support their financial plan. Based in Naperville, Illinois, John serves clients in Naperville, Plainfield, Darien, Aurora, Geneva, St Charles, and throughout the Chicagoland area.
Learn more about John’s services by visiting www.stantongwp.com
John can be reached at l 630-445-2380 or email JStanton@seacrestwm.com.
The Stanton Group WP provides investment advisory services through SeaCrest Wealth Management LLC, (the “SWM”) a registered investment advisor. SWM is a registered investment advisor (“RIA”), with the U.S. Securities and Exchange Commission located in the State of New York. SeaCrest Wealth Management, LLC can be reached at (914) 502-1900.