when you have a client, perhaps, and you see a couple, right?
A couple, there's a husband and a wife or two significant others,
that sort of thing, it allows them really to get on the same page and
that's really the whole goal of a budget itself.
Get's them on the same page, they're looking at it in a way that is more of
a third-party look versus now looking at themselves as internally like you spent
too much here, you've done too much there.
It really gets them on the same page from that aspect of it.
>> Okay and budgeting when I talk about it with students,
I just emphasize the fact that budgeting really lets you know where you stand,
what your current cash needs are, maybe you start thinking about the future and
what future cash needs might be and planning for those.
So, in your experience in working with clients,
how do you have them approach the budgeting process?
I mean where do you even begin if you'd never formally developed a budget for
yourself before?
How do you get in individuals kind of thinking about that and
working towards that?
>> Well, typically before they come in what I'll do was awesome specifically
to bring in like an Excel spreadsheet or something or
write it out of all the things they've been spending on a monthly basis.
Now many times clients will see this as a pain, right?
It's a big pain that we've got to do this, it's time consuming, but
at the end of the meeting they
have a very good understanding of where they're at in the budget.
They understand what they've been overspending on,
what they've been not saving enough for like emergency funds and so forth.
And it gives them a really good idea of where they're at from that standpoint of
that budget.
>> And then so in your experience as you work with people and get them started down
that path towards putting a budget together do you find that people typically
underestimate their cash flow needs or overestimate their cash flow needs or
do people do a pretty good job of being accurate in their budgeting?
>> Many times people are very inaccurate from a standpoint because
they don't want to face the reality of what their budget really is.
That's really what it comes down to.
So, many times they'll come in and they'll give me a list of things,
and I'll start asking them what about this, what about this, what?
And I forgot that, or I forgot this.
So it forces them to face reality with regards to their budget and
really where they're at in the budget cycle, itself.
I mean clients, if clients would just take, once a quarter even,
and just take a litmus test and
do their budget, they'd be much better off five years down the road,
then if not doing a budget at all, and just trying to wing it most of the time.
So that's the reason why it's very very important to have a budget.
>> So Scott in this class we're really kind of focusing the content and the way
we're presenting things towards financial planning for young adults specifically.
And obviously,
this is a topic that's important throughout your life but for young adults,
we might think of that as someone being in their 20s, maybe, just graduating college,
or coming out of a junior college, or high school, maybe, taking their first job.
So, some pretty big financial life changes going on, at that point.
Maybe more income than they had had in the past, but also some probably different and
probably more expenses.
There are obviously other life changes that happen throughout your life whether
you're a young adult or not, having a child, as you near retirement age.
So can you talk about how budgeting process changes or
adapts throughout a person's life and how you work with individuals
to address budgeting when there are major life changes like that?
>> So if we take for
example the question of the young adult just getting out of college and so forth.
Their budget, back in college was, they get 50 bucks,
they go out and just blow it, right?
I mean, because that's all they had at that point.
It was not a big expense for them so to speak.
But now that they've gone to the next level to another step in their life, or
evolution per se, they've gotta really be cautious and
learn to get disciplined about what it is that they're going to do with their
life and how they're going to save for the future.
How they're going to pay for, maybe, student loans, any other types
of debts that they may have incurred during that time in college, and so forth.
So it's really important that they really establish a good budget and
get those student loans paid off as soon as they possibly can.
And then when you think about an individual that they go to the next level
where they get married, and that's another life-changing event.