Budgeting can be a 4-letter word for a lot of people.  No one likes the idea of stressing over where their money is going, but cash flow is the lifeblood of your financial life.  The challenge has gotten even more magnified for many today, as more people are helping not only their children, but also their grandchildren. This may also be at the expense of their own retirement.  Establishing a financial foundation concentrated on optimizing cash flow can be one of the biggest accelerators of financial progress in your life.

Continually monitoring expenses, like stepping on the scale, provides a reality check.  It also offers clarity about where you might want to adjust your budget, or reallocate funds to areas that find more useful or valuable.  The more we consciously focus on our spending, the more likely we will not overspend.  Like exercising or dieting, we know it’s good for us, but can be hard to do consistently.

Budgeting on its own may not be enough, but it can serve as a useful starting point for evaluating the health of your personal economic system.  Many people who are asked to track all their expenses discover their estimate of money left for saving or investing is frequently off because they often exclude unusual expenditures and average the balance. The focus of some financial plans is on having individuals set up automatic bill-pay and meet specific savings goals through monthly automatic deposits. The budgeting then usually falls in line accordingly.

Today, a growing number of largely free online tools are available to help you track your expenses. Companies such as Mint.com and Yodlee MoneyCenter can import and aggregate data from your credit card, bank, and brokerage accounts. They break down your spending into categories, such as dining and vacation. Some programs can even track specific items such as how much you spend on coffee. However, these online tools only provide a fraction of the guidance an advisor can give you. So, incorporating both into your overall financial plan may be the most beneficial. Once you know where your money is going, identifying cuts that can make a real difference becomes easier.

You may want to strongly consider having a monthly meeting with your spouse. If you are not married, a trusted confidant is an option. This meeting should include an honest conversation about your monthly cash flow.  Reviewing where you have been spending money and anticipated expenditures, both short- and long-term.  It could lead to some very interesting conversations.  Having both parties involved, discussing goals and objectives, where you are today and where you want to be in the future, can be helpful.

One of the most important things you can do is save money. A key to success is the ability to delay gratification. Saving is crucial to developing that ability and imperative for anyone who wants to acquire and grow wealth.

(For informational purposes only. Not intended to provide specific advice or recommendations for any individual.)