U.S. Senators will be returning to the Senate floor today to continue debate on financial reform legislation. There is not much new to report since last Friday. However, there have now been a couple Senators who have discussed bringing amendments to the floor which would require a fiduciary standard of all individuals giving financial advice. I have not yet seen record of these amendments submitted, but this news is encouraging. I will continue to monitor the proceedings and report on relevant legislation.

I spent the following weekend providing financial counseling services to members of our armed forces returning from warzones abroad. During this weekend, I had the opportunity to truly reflect on the work I have done with individuals in the past, my educational experiences and what I have realized personally in terms of financial awareness. I have become increasingly convinced that being aware of one’s spending and budgeting habits is the single most powerful financial tool to becoming more financially aware and toward reaching one’s goals.

The impact of investment returns, tax management and income potential together do not equal the power of a well-considered spending plan. I have worked with clients who made a great deal of money yet never moved toward achieving their goals because they spent money frivolously and without a significant amount of awareness about their actions. Conversely, I have seen individuals who never earned a large income yet, because of very deliberate spending habits, were able to amass a large amount of financial wealth and live a comfortable retirement in a manner they hoped to. The difference in reaching goals in these cases was not income nor investment return nor any other factor other than spending habits.  No other single factor in a person’s financial live dictates the likelihood of being financially comfortable and financially aware.

As my conviction has increased, I have also begun to believe that any financial planner or financial advisor providing comprehensive planning services but not spending a great deal of time with clients tracking expenses and creating a budget is failing those same clients in a powerful way. And, in my opinion, providing this service requires more than a simple preparation by the planner of a cash flow statement based on guesstimate numbers given by the client. It requires a tracking and review of expenses over a couple months by the client and planner together. The budget created is not what creates the financial awareness around spending. It is the actual process of reviewing expenses and adding up the total amounts spent in various categories that can show the surprises to clients and help facilitate financial change, if necessary.

The goal of a deep review of spending and creating a spending plan is not to limit the spending of an individual. The process of creating a spending plan is to help this person become more aware of his or her spending habits, help them recognize areas where they are spending more than they believed, and recognize areas which they value highly were they may be able to spend more of their resources. The goal is to help people make well-informed spending decisions by providing the awareness and freedom to spend on items of greatest value and reduce unconscious spending on items not so highly valued.

If your financial planner or advisor is not doing this type of work with you, ask them why. It is truly important and can have dramatic impact on your financial well-being. Remember, a spending plan or budget is not intended to make you cheap, but to help you use your money in ways you value most. That process will likely help you save more, feel better about your finances and more quickly reach your goals.

If you are a financial planner or advisor reading these and not providing this service, please consider doing so. It is simple work and requires virtually no additional training or tools on your part. There is a time commitment involved, but the time spent is well worth the impact this will have on your clients’ lives.