Back in law school you probably had a pretty simple financial plan: making sure you paid your hydro bill so the lights stayed on. Going out to the movies (if you ever had the time) may have resulted in a smaller bag of groceries that week. You may have dreamed of a level of success where you’d never need to budget again. But like the child who imagines eating chocolate all day when (s)he becomes an adult, it isn’t such a good idea when the moment arrives. Success creates different reasons to stay on top of your finances.
What happens to many high earners is that they get busy; they work hard, play hard and are often raising families at the same time, and they lose touch with where their money is going. And that’s when overspending habits can creep in and threaten the future.
You may have a mortgage on a home, possibly a second mortgage on a cottage and maybe even a third on an investment property. You are creating a lifestyle that you will want to protect, so retirement planning needs to be on your radar. You may have children you would like to support through higher education; you may even want to get more education yourself. Maybe your kids are in private schools, or involved in sports and activities. And since you work hard, a couple of vacations each year are likely well deserved. Unless you are Bill Gates successful you need to pay attention if you want all these things to be possible without going into debt.
So, do 6-figure professionals need a budget? Maybe not a restrictive budget designed to make ends meet; but the more successful you are the more you need a plan to manage that success. At Money Coaches Canada we’ve created a Spending and Savings Plan. It starts with a snapshot of where you are now: your income, fixed expenses, and variable expenses. Being aware of your habits and patterns will give you insights that have more long-term value than anything you can invest in, buy or sell. You can get started here.
Once you have the numbers in front of you, ask yourself this: Does your spending reflect your values and what’s important to you? If the answer isn’t yes, you deserve to do better by yourself. It’s not a mindset of what will I have to sacrifice, it’s more about making a commitment to what matters most to you.
It may be years since you’ve had to choose between groceries or a night at the movies, but you arrived where you are today because you paid attention to those choices. There are new choices to make that will impact where you are 10 and 15 years from today.
Link to spending and savings plan worksheet: http://www.moneycoachescanada.ca/mccfiles/unstuck/Spending%20and%20Savings%20Plan.pdf )