It can be challenging to keep your finances in check, particularly with an unpredictable economy, inflation and rising household expenses. Budget counseling could be the answer to get in a better position to manage your money.
Read about what it is and how to decide if you need it.
What Is Budget Counseling?
Budget counseling is primarily about educating consumers with the goal of helping them establish long-term budgeting and debt-management skills, Matt Bees, a certified financial planner with Wells Fargo Advisors, said in an email.
“Budget counselors may provide guidance on financial topics such as creating a budget, improving credit scores, getting out of debt, or navigating or avoiding bankruptcy,” he said.
For example, Bees says as a financial advisor, there are times that he provides guidance to his clients regarding saving money in order to reach their goals.
[READ: How to Create a Saving Strategy]
“I also help my clients navigate the financial impact of life events like purchasing a new home, marriage and divorce, ” he said.
What Can Consumers Gain from Budget Counseling Regarding Money Management?
Creating a budget can be daunting for some, experts say, but that’s where help from money experts comes into play.
“The idea of creating a budget can certainly feel overwhelming, especially with the amount of work involved in tracking your everyday spending,” Bees said.
But the time you put in and the level of details in your budget can help you feel empowered by allowing you to make better financial decisions, he added.
For anyone who might be resistant to the concept of budgeting, there is likely a benefit to taking a step back and thinking about the big picture.
[READ: Hate Budgeting? Here’s How to Reframe It]
For instance, Bees said to consider these questions: Where do I want to like to be in five or 10 years?, What does my ideal retirement look like?, How do I want to safeguard my money and support my family? and What do I want my legacy to be?
He said these questions have both financial and emotional components, and the corresponding answers represent goals. “Once those goals are defined, a person is likely to be more motivated to do the work necessary to accomplish them,” he said.
How Can Working With a Professional Help?
When you speak with a professional on budgeting and money management, you’ll gaining insights on your financial goals, learn strategies for effective budgeting, understand the importance of aligning your spending with your priorities and likely feel empowered to take control of your financial future, Haitham R. Suleiman, a goals coach with U.S. Bank, said in an email.
“Additionally, through conversation with a professional, you can develop an understanding of your financial habits and behaviors, identify areas for improvement, and receive personalized guidance and support to help you achieve your financial goals,” he said.
“Ultimately, engaging with a professional regarding your budget goals can lead to increased financial literacy, improved financial decision-making and greater confidence in managing your finances,” he added.
Types of Guidance You Can Get From Budget Counseling
Having an expert perspective can be a game changer toward mastering your personal finance goals. Here’s how budget counseling can make this happen:
[Related:How to Be Master of Your Cash Flow]
Assistance with money management. Money management is critical to building a strong foundation and achieving financial stability, Suleiman said. “It empowers the individual to track their income vs. monthly spending and determine their potential savings after covering all necessary expenses.”
Help creating a budget. Budgeting tools, expense prioritization worksheets and calculators are crucial for individuals looking for financial stability, Suleiman said. These tools can help you categorize and prioritize expenses and distribute funds appropriately .
Prioritizing needs vs. wants: Understanding the difference between “needs” and “wants” is crucial for having an effective budgeting strategy. “Understanding the difference between essential and non-essential expenses can help you make informed financial decisions and be able to distribute funds to necessary categories,” Suleiman said.
Monitoring your credit score. Your credit score is critical because it helps lenders determine your creditworthiness. Good credit allows you to leverage your wealth with credit and loans, such as a mortgage. The higher your credit score, the better your financing terms.
Tips to reduce overspending. Natalia Brown, chief compliance and consumer affairs officer with National Debt Relief, said in an email that using cash over credit can be a smart move for some consumers. “If you aren’t able to pay credit card balances off monthly, set a limit on monthly spending for fun activities, pull out cash … and leave credit cards at home to reduce the temptation to spend more while out,” she said.
“Using cash also gives you a better visual and feeling of seeing the money you’re spending in real-time compared to credit card statements which are received long after the purchases are made,” she added.
More from U.S. News
Has Tap-to-Pay Made Spending Too Easy?
8 Personal Finance Ratios You Should Be Tracking
How to Be Financially Responsible — And What It Means
What Is Budget Counseling — And Do You Need It? originally appeared on usnews.com
