Following a personal budget is a lot like losing weight.

You can hire a personal fitness trainer or a nutritional coach, but they can’t shed the pounds for you.

Similarly, a financial advisor cannot magically grow your bank account or stop your impulse Amazon buys. At Harvest Wealth Group, we stress the importance of being in control of your money and taking ownership of your spending habits.

Before you can begin to build your wealth, you must start with a basic concept: a budget. And just like with weight loss, the key to sticking to a budget is accountability. Here are six ways to keep yourself accountable.

1. Dive deep into the data.

Budgeting is about making a roadmap for your future financial health so you can reach your future financial goals, but you need to start by looking at your past income and spending habits.

Digging out receipts, pay stubs, and bank statements is a task that many will go to great lengths to avoid, but it is the only way to build an accurate budget. Looking at every line item on your bank statement or credit card bill will ensure you’re not forgetting about any monthly expenses, such as your Netflix subscription or your prescription medications.

It is also important to consider all sources of income beyond your regular paycheck, including dividends from investments, alimony, capital gains, Social Security, or other streams.

If you haven’t kept good records of your past income and spending, you can try to record every dollar you spend for one month (yes, even that drink out of the vending machine or the wrapping paper you bought from your niece’s school fundraiser). Write down your expenses—your utility bills, your loan payments, your groceries, and so on—and then use that as your basis for your “expense” column on your budget.

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2. Budget every last penny.

Zero-based budgeting doesn’t mean your bank account will have $0 in it at the end of the month. It simply means you have a plan for every penny you earn. 

Start by allocating your monthly income to the necessary expenses: your rent or mortgage, groceries, and transportation. Maybe it turns out you have $350 left over—great! You should still make a plan for that money, whether you choose to invest it in a stock portfolio or up your 401(k) contribution.

3. Compare your spending to the average American budget.

Studies have shown that regardless of household income, personal budget percentages across categories remain the same for most Americans. Check out this breakdown from the Bureau of Labor Statistics:

  1. Housing: The average American spends about 33 percent of their income on housing, which can include mortgage payments, rent, property taxes, repairs, and insurance.
  2. Transportation: About 16 percent of the average American’s income is spent on transportation, including the purchase of a vehicle, gas, and maintenance.
  3. Food: Americans spend about 13 percent of their income on food each month, whether they are cooking at home or dining out.
  4. Insurance/retirement: The average American spends about 12 percent of their income on personal insurance and pensions.
  5. Health: On average, 8 percent of income goes to healthcare and health insurance.
  6. Entertainment: Americans spend about 4 percent of their income on entertainment.
  7. Donations: About 3 percent of the average American income goes toward charitable giving through cash contributions.
  8. Apparel: Americans spend about 3 percent of their income on updating their wardrobe.

The breakdown above is not necessarily the “right” way to budget your money, but it provides a helpful comparison for your own spending and saving habits. If, for example, you find you are spending twice the U.S. average on food each month, perhaps you can take a look at your eating habits. Alternatively, if you’re barely spending any of your income on retirement saving, it may be a good idea to reduce spending in other areas to balance that.

4. Revisit your budget every month.

Budgeting is not a “set it and forget it” process. You will want to revisit and readjust your budget on a regular basis if you want to use it to reach your long-term goals.

No two months will be the same. One month you might receive an unexpected bonus from work, and the next you might discover a leak in your roof that requires a costly repair. You may find that your budget often goes in the red in December as you splurge on Christmas gifts for your loved ones, but you might make up for it by spending frugally the next month.

Tracking your progress and looking for trends is a critical part of budgeting for long-term financial success.

5. Try different tools

The best tool for budgeting is the one that works best for you. Maybe it’s a notebook you keep in your office, or maybe it’s an Excel spreadsheet you keep on your computer.

There are also hundreds of apps and softwares—some free, some with a small subscription fee—that are designed to help you stick to your budget. Some of the most popular apps are Mint, PocketGuard, You Need a Budget, and Wally.

Whether you settle on a manual budget system where you write down every expense and store your receipts or pick a more technical tool that links to your bank accounts and automatically categorizes your purchases, the only thing that matters is that you stick with it.

6. Work with a financial advisor.

Garrett German, founder of Harvest Wealth Group, likes to explain his feelings about when to work with a financial advisor with the popular Chinese proverb: The best time to plant a tree was 20 years ago. The second best time is now.

A financial advisor will take your budgeting to the next level. If you’ve been successfully saving a small percentage of your income each month, a financial planner can find a way to gradually increase that percentage to a target of 10-15 percent.

“We’re not going to get nitty-gritty with your budget, and we’re not in your head as you’re making every spending decision,” German said. “Instead, we stress the importance of being in control of your money. We will help you make a plan and we will empower you to make the best decisions to reach your life goals.”

Creating a Personal Financial Plan to Help You Reach Your Money and Life Goals

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