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Where Do You Spend Your Money?

Guess what? It doesn't matter.

That's right. I'll say it again. Where you spend your money doesn't matter. Let me explain a little.

This is the time of year when we get a lot of calls from folks trying to make money resolutions for the new year, and this usually involves some type of budget. Sometimes people want us to help them make a budget, or they want us to look over one they've created, and of course we're happy to help. Over the years, we've seen a few trends in these conversations that I want to address today.

Some people come in with large amounts of debt that they seemingly have no clue where it came from. They'll say they went out to dinner an extra time and bought some new shoes, but that doesn't add up to that $50,000 credit card balance. Here's where they went wrong: they're not looking at the big picture. They're looking at the cliche "latte factor" things that people tend to waste money on instead of looking at the reality of their situation. An extra dinner out? Nice shoes? It doesn't matter. The money is spent. Where is irrelevant.

Whether dealing with debt or not, people tend to miss a lot of things when they make a budget. They remember their utility bills and car payments and mortgages, but where they trip up are in things that don't necessarily happen at regular intervals, or aren't fixed costs. Home improvements, weekends out with friends, entertainment expenses, pet care, etc., are all items that need to be accounted for in a budget, but usually aren't. Then, when that budget gets busted, it's less important to nickel and dime where the money went than to adjust how that budget is approached in the first place.

Now, I'm not saying to just go out and spend with reckless abandon. What I'm saying is to find balance in a budget that works for you. For me, I'm pretty frugal (some might say cheap) when it comes to buying clothes. Today I'm wearing a sweater I found at Goodwill, and I plan to get a lot of wear from it. I've also recently gotten interested in vinyl albums, and treated myself to a nice turntable. I spend less there so I can spend a little more here. Where is less important than finding balance.

While we're in this deep freeze and you're thinking about the year ahead (and maybe the warm places you'd like to visit!), put some thought into your 2018 budget and how you'll keep it balanced to fit your lifestyle. And as always, give us a call if you need a little guidance.

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