Do 6-figure professionals need a budget?

By: Updated: September 13, 2016

 

September is a natural time to look forward and set goals, but it is also a good time to reflect on how far you’ve come.

Looking back over the last year, life may not be dramatically different, but if you look back 10 or 15 years, so much has probably changed, especially in terms of your career and income.

When you were starting out you probably had a pretty simple financial plan – pay the bills so the lights stay on. Going out to the movies may have meant you’d have a smaller bag of groceries that week, and you may have dreamed of the day when you’d reach a level of success that you’d never need to budget again. But like the child who dreams of eating chocolate all day when (s)he becomes an adult, it isn’t such a good idea when the moment arrives. Now that you have achieved a good measure of success, you probably have a lot more reasons to stay on top of your finances.

So, do 6-figure professionals need a budget? Not if your idea of a budget is restriction and inflexibility. At Money Coaches Canada we’ve created a Spending and Savings Plan, not as a euphemism for the word budget, but as a tool that keeps you engaged with your money. Engagement fosters informed decisions and informed decisions will likely be in your best interest long term.

What happens to many high earners is that they get busy; they work hard, play hard and are often raising families at the same time, and they lose touch with where their money is going. They don’t have to choose between groceries and a movie anymore, so they may stop worrying about day to day spending in general. The catch is, with success comes different reasons to pay attention.

You may have a mortgage on a home, possibly a second mortgage on a cottage and maybe even a third on an investment property. You are creating a lifestyle that you will want to protect, so retirement planning needs to be on your radar. You may have children you would like to support through higher education; you may even want to get more education yourself. Maybe your kids are in private schools, or involved in sports and activities. And since you work hard, a couple of vacations each year are likely well deserved. Unless you are Bill Gates-successful you need to pay attention if you want all these things to be possible without going into debt.

So what is a Spending and Savings Plan? It starts with a snapshot of where you are now: your income, fixed expenses, and variable expenses. Being aware of your habits and patterns will give you insights that have more long-term value than anything you can invest in, buy or sell.

Once you have the numbers in front of you, ask yourself this: Does your spending reflect your values and what’s important to you? If the answer isn’t yes, you deserve to do better by yourself. It’s not a mindset of what will I have to sacrifice, it’s more about making a commitment to what matters most to you.

It may be years since you’ve had to choose between groceries or a night at the movies, but you arrived where you are today because you paid attention to those choices. There are new choices to make that will impact where you are 10 and 15 years from today.

If you need help navigating your personal path, a financial coach may be the answer.  Connect with one of our Money Coaches for a free consultation here.

Interested in learning more about a Spending and Savings Plan? Click below to download a complete set of worksheets.

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Sheila Walkington, CFP® is the co-founder and CFO of Money Coaches Canada – the nation’s leading provider of advice-only financial planning. Offering unbiased, transparent financial advice, Money Coaches Canada and their 7 Stages of Financial Well-BeingTM helps clients move closer to life’s most important goals. Sheila is the co-author of Unstuck – How to get ahead financially and start living the life you want and Your Money Map.

 

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