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Brian Plain, CFP® | Riverside IL | Oak Park IL | Chicago IL Financial Planner

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CERTIFIED FINANCIAL PLANNER (TM) professional helping Gen X families live better by blending what works for them both financially and emotionally.

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Brian Plain, CFP® | Riverside IL | Oak Park IL | Chicago IL Financial Planner

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Reverse Budgeting - A Better Way To Budget

September 10, 2018 Brian Plain
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We keep things simple around here by focusing on the big picture and things that matter. That puts us at odds with traditional budgeting. It's terrible, right? I hate it as much as you do.I hate it so much that I practice what I call reverse budgeting instead.

Creating your reverse budget

Step 1: Decide what you're attempting to achieve.

Step 2: Figure out if you're saving and investing enough to get there comfortably

If you are, great. You're done. You can do whatever you want with the rest. No impact analysis of your daily latte habit is necessary. If you're not, adjustments need to be made either to what you're aiming to achieve or how much your spending and saving right now in hopes of getting there.

Whether you need to make adjustments or merely desire a better sense of your saving versus spending, you've come to the right place.

A great question to start your reverse budgeting process

What are the three things you spend the most on each month? For instance, my top three spending categories each month are:

1. Housing

2. Food & dining out

3. Childcare

Figuring out your own “big three” will help you identify what adjustments make the largest impact. As an example, I know eating lunch & making more coffee at home makes an immediate impact for me because it lowers what I spend dining out.

Budgeting only becomes complex because we let it, but it's actually very simple.

If you're not on track to get where you want to go, your choices are:

A) Spend less

B) Save more

C) Do both

Notice what's missing from the list? Earn more. You can't earn your way out of a spending & saving problem. When you earn more but don't save more, you're experiencing lifestyle inflation. Your current lifestyle improves but it does so at the expense of your future well-being.

If you dislike budgeting as much as I do, I encourage you to give my reverse budgeting approach a shot. Need help getting started? Schedule a call.

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← Personal Finance Tips to Help Change Your Money MindsetHow to Address Overspending Habits →
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Brian Plain, CFP®

Brian@PlainFP.com | 708.406.9755

Office Locations:

224 S Marion Street, Oak Park, IL 60302

318 W Adams Street, Chicago, IL 60606

(By Appointment Only)

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Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Brian Plain offers Investment Advisory Services through Gradient Advisors, LLC (Arden Hills, MN 877-885-0508), a SEC Registered Investment Advisor. Gradient Advisors LLC and its advisors do not render tax, legal, or accounting advice. Insurance products and services are offered through Brian Plain, independent agent. Brian Plain and Gradient Advisors, LLC are not affiliated with or endorsed by the Social Security Administration or any government agency. All written content on this site is for information purposes only. Opinions expressed herein are solely those of Brian Plain, and our editorial staff. The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any State other than the State(s) Brian Plain is registered or where otherwise legally permitted. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual adviser prior to implementation. Hyperlinks on this website are provided as a convenience. We cannot be held responsible for information, services or products found on websites linked to ours.