Do you have a B-word?

Hey, y'all!

In the transition to my new life in the South, I also had big changes to my finances. The cost of living was obviously lower than in California, which is to be expected if you relocate out of California in general. We also have family help now as well. We were spending a crazy amount on daycare in Napa. It was roughly $1800 or so which is more than many Americans' mortgage on its own. With all of our other costs of living, this added up to running a tight budget until my two girls were in a public school system to relieve this burden.

Fast forward, here we are with no daycare costs and lower overall costs of overall living, but does that mean we slack on a budget (there it is, the b-word)? Not a chance! It’s easy to slack on this when your costs decrease and create more flexibility and freedom but now we need to shift our mindsets to other goals.

Some of my goals:

1. Hire an assistant to be an active member of my team and help grow my practice, setup meetings, do paperwork, and handle daily tasks that aren’t in my skillset.
2. Save more! Retirement planning is important to me. Most advisors don’t have their own retirement plan because they are their own worst enemy like many other business owners in other businesses. I am not one of those people. Retirement, 529 plans, UTMA accounts…many options to save for the family.
3. Add an outdoor space that suites my wife and I’s love for entertaining and outdoor cooking…thinking firewood pizza oven ;-)
4. Travel more with and without the kids. We haven’t had the opportunity to do that before because we didn’t have close family to support it.

So, how do we accomplish this? We need a new b-word, a budget. I want to share one of my favorite ways to budget with you and see if it resonates. There is no perfect formula, just the one that works for you and I find this one simple and effective. When I started this process it made so much sense to me because it allows freedom, flexibility and one of my favorite words in my business is discipline. No, not like smacking you on the bottom when you are bad discipline. More like, wake up and make your bed everyday discipline. I also like it because it helps you work backward and gives you guide rails.

It’s called the 60-40 budget and here it is. Take your entire NET income from your household and break it up 60%/40%. Here is the breakdown:

• 60% -This is your baseline costs. The ones you cannot avoid. The mortgage, car payments, utilities, insurances, food and beverage (this does not include going out to eat).
• 40%- This part is actually broken up again into 4 parts but it’s easy.
  • 10% Fun money! Go have some fun and spend; clothes, dinner, gifts.
  • 10% Long-Term Savings- Buy an investment property, sailboat for retirement.
  • 10% Short-Term Savings- My backyard gazebo with cooking suite, travel.
  • 10% Retirement Savings- My “I don’t have to work anymore” money.

Pretty straight forward right. Keep in mind that if you have wiggle room in the 60% because your income allows it, then you should move that over to the 40% as you see fit. Do you feel or know you are behind on saving for retirement? Do you want to spend more now time with your wife on travel? Whatever it may be, that’s what an advisor is here to help you decide.

*Content in this material is for the general information only and not intended for provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

*All investing involves rick including loss of principle. No strategy assures success or protects against loss