If Your Financial Advisor Does Not Talk To You About Budgeting, They Are Failing You

The concept of budgeting frightens you, doesn't it? Financial advisors long ago learned that bringing that word up with clients often caused clients to disengage from a discussion and no longer listen closely. Many people don't like the idea of budgeting. They feel it will restrict they choices, be difficult to implement and just a general pain in the rear. Many advisors decided to spend very little time on budgeting discussion, or ignore them entirely, because of the negative effect it had on clients.

Advisors who are claiming to help you reach your goals but have chosen to not spend time working with you on your budget are failing you.

I think this because I believe that understanding the way you use your money is the most important element to making well-informed financial decisions. Going through the process of creating a budget helps you understand your spending habits and helps you recognize ways you use money that you were not aware of or had not intended. Working on a budget is the best tool to truly understand what your priorities are, what you value, and how you really want to use your money.

Creating a budget is not designed to restrict your use of your money. It is your money after all and you have a right to spend it as you choose. Creating a budget is designed to help you understand your spending and adjust your spending to items you value the most. Creating a budget creates financial freedom for you and allows you to make well-informed financial decisions that will help you reach your goals.

If your advisor does not work on budgeting with you, or at least discusses the importance and gives you tools to do it yourself, they are missing the most important and highest impact financial advice service they can provide to you. 


Chad Nehring CFP said...

Trying to plan finances without a budget (or "spending plan") in my opinion is akin to building a house without a set of plans, nor a solid foundation to build said house upon. Nice article Nate and so true...

Lori M. Coonen said...

I whole heartedly agree - you need the foundation before you can start building the plan to achieve their goals.

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