Overview

Budgeting

Asset/Income Protection

Tax Reduction

Investments

Retirement Planning

Estate Planning


3023 East Copper Point Dr. Suite 106 Meridian, ID 83642
Office: (208) 466-1971

 

 

Planning Services
Home Client Resources About Us Planning Services Product Solutions FAQ Contact Us

BUDGETING

Over the years, I have found that my clients who have the best handle on their budgets usually have more discretionary income (at least they know they have it) and are usually better able to set and work towards other financial planning goals.

Mitch Anthony, in his book “The New Retirementality” addresses budgeting in a way that I have come to appreciate. The process he outlines is very much akin to Maslow’s hierarchy of human needs.

The first level of budgeting could be referred to as survival. A survival budget only takes into account those things which one must have to survive. Items to include in this phase include food, clothing, and shelter. It is also reasonable to include electric and gas utility costs as well as basic transportation since most of us need transportation to get to or job, which supplies the money we need. I would also include property insurance required by the mortgage company and vehicle insurance as required by the state.

The second level of budget is safety. A safety budget may be affected by our actions as well as our spending. For instance, spending money on an exercise program and eating a healthy diet could be classified as contributing to a lower safety budget, as could a focus on safe driving habits or practicing safety at work. A familiar element in a safety budget is insurance, since insurance is a widely recognized and cost effective way of protecting income and assets from events that have a low probability but carry significantly adverse consequences should those negative event occur. Common insurance components of a safety budget include health, life, disability, long-term care, auto, home, and business policies. Retirement and education savings generally belong in this budget.

The first two levels of budgeting don’t focus on much that is fun. That’s where the third level, or freedom budget comes into play. Different folks enjoy different forms of fun and fulfillment. A walk in the park carries significantly less cost that a walk on the golf course. Dinner and a movie can be low cost or more extravagant. A big vacation versus a few weekend trips…you get the point. Your freedom budget can address what it is that help you renew and “sharpen your saw” so that you can return to your regular tasks with vigor. On some occasions, it might make sense to integrate your freedom activities with your work: a rare and wonderful opportunity for those you accomplish that combination.

The final budget phase could be summed up in this question, “After you have covered your basic, safety and freedom budgets, what is the highest use of your money?” Legacy, charity, monuments, etc. can all fall under this budget, and it is a sublime pleasure to contemplate such use of resources.



Internet communications pose special licensing problems because of the accessibility to the public across jurisdictional lines. A rep-advisor is not permitted to make any direct communication with a prospective client unless the rep-advisor is appropriately registered in that prospective client’s state. For this reason, each website must have the following disclosures:
Investment Advisory Services offered through Investment Advisor Representatives of Cambridge Investment Research Advisors, a Registered Investment Adviser. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, to residents of: Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Kansas, Maryland, Massachusetts, Montana, Nebraska, Nevada, New Mexico, Oregon, Utah, Washington, Wisconsin. Cambridge and Cornerstone Financial Planning, LLC. are not affiliated.