Getting Your Clients on the Budget Bandwagon

For many people, budgeting can feel like a punishing restriction placed upon their finances. However, budgeting effectively grants complete control over your day-to-day cash-flow. By helping your clients track their spending, you’ll move them from the frustration of wondering where their money has gone to having a plan for every dollar.

To successfully navigate your clients through a budgeting plan they can maintain, reshape their view of budgeting from restriction to intentional spending. Changing this mindset encourages your client to create and stick to reasonable budgets.

Steps to creating a budget

Your clients don’t need a complex budget to track their spending. In most cases, a budget can focus on a minimum of three major categories: core needs, financial responsibilities, and discretionary spending. Keeping those three categories in mind makes the budgeting process more manageable.

1. Core needs
Help your clients first by identifying what they need to maintain their dignity. Think housing, transportation, and groceries. Housing and transportation are generally fixed and predictable from month to month, so the only area that needs to be tracked in this category is groceries.   

2. Financial responsibilities
Next, consider what your clients need to plan and protect their future. These financial responsibilities typically include retirement savings, emergency funds, personal insurances, and children’s education savings. Much like the core needs, these costs are generally consistent when there is proper financial planning in place.

3. Discretionary spending
Everything left after accounting for core needs and financial responsibilities is discretionary. Whether your clients use it to eat out with friends, take a family ski trip, indulge in a golf outing, or do something completely different, it's up to them to decide. Encourage your married clients to consider having separate "no questions asked" discretionary spending accounts, which can help prevent financial arguments and preserve the feeling of autonomy within a relationship. 

Note that the items that fall into this category, like groceries above, need to be tracked. There are generally just a few categories here. For example: husband discretionary, wife discretionary, spending on kids and vacations.

Keeping clients accountable

The most critical part of creating a budget is turning your variable expenses into fixed expenses. For example, someone who cold survive spending $500 per month on groceries could easily spend $1,500 in a month if they aren’t tracking it. However, helping our clients on this front can be easier said than done.

Remember, our job is not to scold clients if they overspend from time to time. Budgeting plans are dynamic and should leave room for overindulgence every now and again. Instead, the best way we can help is by keeping clients aware of their spending habits. It’s important to remind them that any extra money they spend must come from somewhere. For example, an unplanned vacation abroad is a lot of fun, but the money spent for this trip might have to come from discretionary spending or their children’s education fund. Is this a sacrifice they’re willing to make?

Even though there are many great online tools for clients to track their finances, such as or a simple Excel spreadsheet, I've found clients tend to take an "out of sight, out of mind" approach to their bookkeeping. The process can be time-consuming and easy to forget until left with the overwhelming task of tracking down payments for the month.

Instead, being able to see a breakdown of monthly expenses is beneficial for clients to see how much or little they are spending. Offering bookkeeping services on our end can help keep clients accountable and up to date about their spending.

Jed Levene, MBA, CFP, CLU, FMA, CHS is a 12 year Qualifying and Life MDRT member.  He is an active member of Advocis, MDRT, and Rotary International. Jed focuses on financial planning for Business Owners and Professionals.