Author Topic: Financier Budgeting Strategy  (Read 2108 times)

Offline Billy_McSkintos

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Financier Budgeting Strategy
« on: December 20, 2016, 10:31:44 AM »
A (27yr old) friend started discussing his financial woes with me and I shared my success with YNAB. I pointed him towards their website to learn the strategies but encouraged him to use Financier as the tool. I want to ensure he picked it all up and work with him build a strategy to financial security and not live pay check to pay check. I am thinking about educating him on the following and using Financier but want to start a conversation with you all and develop this for him but also, as other posts have mentioned, for those that are new to Financier and haven't been through YNAB first.

  • List of all accounts, balances, assets, debts, liabilities, savings, investments and income.
  • Understand the definition of budget
  • Create a budget: Spend less than you earn
  • Plan for and expect surprises
  • Track expenditures regularly
  • Pay off Debt
  • Save to Buffer
  • Review and Refine
« Last Edit: December 20, 2016, 02:45:17 PM by Billy_McSkintos »
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Offline RPNnerd

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Re: Financier Budgeting Strategy
« Reply #1 on: December 20, 2016, 12:24:18 PM »
I see the mechanism in three parts:

1) Accounts
2) Budgeting
3) Reconciling

You start with the accounts.  What do you have on dollars and debts?  These get entered into each account.  There's not thinking yet.  It's gathering of information.

Next step is to create the categories.  What types of things do you spend upon?  This won't be the final view but dealing in the budget, make the categories and look at it toward "having fun".  We're not quite there with assigning dollars yet... categories come first.  It's not the final draft-- you will realize further categories or other ways to organize.  But don't think about the money yet, think about areas of spending that exist in your life.

Step three... time to assign the existing dollars into the categories.  It's all "new money" so the first month is "funky" and is expected to be odd-- it assigns the dollars (and/or debt) that are in all the accounts.  The plan begins but there is a lot of uncertainty.  The first month will be sloppy.

This is the "reconcile the budget" idea-- looking at needs and assigning dollars. This is also where taking a separate piece of paper and making goals and plans come into the picture.  And this is when you can figure out how close you are to next bills due and consider the 1/6 or 1/12 regular dollar assignment (and initially how much you should have).  Also this planning period should be the beginning of priorities.  Compare the categories, the amounts assigned and the priorities.

Step four... assign spending to the categories; review category amounts when spending.  WAM when needed...

Step five... reconcile the bank/credit reports against the accounts.

Step 6 get into a regular groove as one repeats the steps and after some time check out the reports.  Learn what the spending patterns can tell you.... shift the goals and longer term plans-- make new ones.

And keep having fun.  Zero sum seems scary.... but once in the groove it's fantastic knowledge and feedback.  My wife is not that into budgeting but picked up the process (except letting me reconcile and assign the dollars-- it's been up to me to figure out her spending and she gives a heads up on the category needs).  She knows the red is bad (and needs adjustments)... but she's had more saved up with the zero sum than she's had before and she's gotten to the buffer stage.  She heard someone bemoaning how there's never enough money and she started proselytizing... "you know, a zero sum budget is really helpful...".

I said "whoa.... really?"   

She adopted because she saw my excitement and figured I would expect her to join in.  I think the value proposition didn't occur to her.  She did it because she loved me.   But there are more blessings that have come out.