Everwise Podcast: Tips for Successful Budgeting in the New Year

Jeremy Riffle: Hello and welcome to the Everwise podcast. At Everwise, we believe in empowering people to take control of their financial futures. This series is designed to offer tips and insights to help you feel confident in your financial decisions and in the individuals assisting you. I'm joined today by Adam, an area manager for Everwise in central Indiana. Adam, we've discussed this before, and with the new year upon us, let's delve into budgeting and creating a plan that's sustainable. It's the perfect time for that. You've emphasized the importance of understanding one's financial position. Can you elaborate on what that means and how someone can achieve it?

Adam Young: Thank you, Jeremy, for having me. Budgeting and cash flow are crucial topics for me. At the start of a new year, it's an excellent opportunity to assess your current financial status and project into the future. Knowing where you stand financially involves detailing your monthly income and understanding how each dollar is allocated, especially focusing on individual needs.

Jeremy: So, getting started involves figuring out where you are today, understanding your income and expenses. How does one determine their financial goals and plan for the next 5 to 10 years?

Adam: Absolutely, Jeremy. It's an introspective process. Individuals have unique financial responsibilities and aspirations. While it varies, a framework can guide this exercise. I recommend putting pen to paper to outline your monthly income, deducting essential expenses like housing, food, and utilities. It's crucial to anticipate potential unforeseen expenses by having a reserve for unexpected events.

Jeremy: Planning for the future, especially long-term goals like saving for a child's college education, requires careful consideration. How can one start saving for such goals, taking into account potential future cost increases?

Adam: Future planning involves analyzing current costs and anticipating future changes. For example, if you're saving for a child's college education, research the current costs and historical trends in tuition increases. This data helps estimate future expenses. Additionally, consider how your savings are invested, as this plays a role in achieving your financial goals.

Jeremy: Once a budget is in place, how can individuals ensure they are staying on track, and how frequently should they review their financial status?

Adam: Monitoring your financial progress is crucial. I recommend a comprehensive view, focusing on your net worth analysis. Personally, I evaluate my net worth monthly, which reflects debt reduction and asset growth. Initially, weekly or monthly assessments may be necessary, transitioning to quarterly or biannual reviews as you become more comfortable and confident in your financial plan.

Jeremy: Budgets require discipline, and occasional splurges are a reality. How can individuals accommodate occasional indulgences without derailing their financial plans?

Adam: Splurges happen, and it's essential to factor them into your plan. Allowances can be made within your budget, similar to setting aside funds for an emergency. If an unplanned expense arises, adjust your spending habits in the following months to compensate and get back on track. Constant refinement and adjustment are key to success.

Jeremy: As we enter the new year, summarizing our discussion, it's crucial to understand your current financial position, create a budget, and set realistic goals. Any final thoughts or advice?

Adam: Absolutely, Jeremy. Establishing rules for yourself and your family is essential. Rules, whether verbalized or visualized, provide a framework to stay on track and achieve financial objectives. They've been instrumental for my family, especially when applied to specific categories like food expenses.

Jeremy: Can you share an example of a rule your family follows to illustrate this?

Adam: Certainly, Jeremy. One effective rule for us is using physical cash for grocery and restaurant expenses. This tactile approach forces us to stick to our budget, preventing overspending. Implementing such rules can be beneficial in staying disciplined.

Jeremy: That's great advice. Thank you, Adam, for your insights. Wishing everyone a Happy New Year.

Adam: Happy New Year, and thank you for having me.

Jeremy: This podcast is provided as a public service by Everwise Credit Union. The views expressed by guests are their own and do not imply an endorsement by Everwise Credit Union. Employees' views are their own and do not necessarily reflect the views of Everwise Credit Union or its officers. The podcast does not provide financial, legal, or tax advice. Always consult with a professional for your specific situation.