Financial Tuning to Help Make Your Budget Sing

Planning and examining a budget isn’t just something that should be done at the beginning of the year; in fact, local certified public accountant Doug Wright said that the summer is a great time for a midyear financial tuneup.

“It may seem counter-intuitive to set things up midyear but actually it’s a very wise practice,” Wright said.

As a member of the Troy-based Michigan Association of Certified Public Accountants, Wright said while the personal tax season may several months away, summer offers a good check point to review any changes that need to be made.

Wright, who works as an accountant at Gordon Advisors, P.C., recently spoke with Troy Patch about accountant services on behalf of the nearly 18,000 members belonging to the MACPA. 

Why hire an accountant?

Wright said a CPA is used mainly to guide finances, which should help make the process quicker than it may otherwise may be, and provide advice and ideas on how to better track finances.

A midyear financial tuneup may take a couple of hours and can typically be done for less than $500. Wright said its helpful to both parties when clients have goals in mind when first speaking with an accountant.

First-time clients can probably expect two visits to get the process moving. After that, he said, one visit is all it takes to get the job done because they already have the tools to do so.

Consolidating investments and debt

For people finding themselves juggling bills and other debts, Wright said consolidation may reduce the amount they are paying in interest. That may mean transferring withstanding debt to lower interest credit cards or perhaps taking out a low interest loan.

While seeking out an accountant may a hard option for those already facing financial troubles, the return may be worth the effort. However, the Federal Trade Commission and other government funded entities can offer some advice at reduced or no cost. Information may be found at the commission's website here.

Wright said keeping track of investments is the key to making your money work for you. That may mean condensing how things are managed and knowing when to make changes.

“It’s sometimes better to step back and see how you’re investments have done over a period of time,” Wright said. “The big thing for now is there’s still time left in the year if you need to switch course.”

Tips for investing income:

• Keeping track of investments is easier if there's only one place to look. Wright said condensing investment views will help provide a clear picture of what investments are working well and what aren't.
• Talk to a professional about where to put your money, even when investments are performing well.
• Diversify your investment portfolio. If your money is all invested within the exact same industry, “you’ve subjected yourself to a failure to diversify,” Wright said. Doing so can be a bad idea because that one industry might not always be strong.
• Don't get caught up in following the day-to-day patterns. Step back and take a look at the big picture.

Maneuvering a budget

The thought of managing a budget doesn't have to be frightening. Making a budget that's easy to maintain, and clearly labeling revenue and expenses, can help identify spending habits and finding where and if cutbacks are needed.

Budgeting tips:

• Detail revenue and expenses by creating a spreadsheet using Excel that details revenue sources and expenses within the calendar year. Wright also noted that QuickBooks has a checkbook program that allows disbursements to be categorized electronically as they are made.
• Maintain accurate data by keeping all receipts and bills.
• Keep in simple. Wright said people often have difficulty managing a budget because they create too many categories and subcategories. Having about seven or eight budget categories will keep things from getting too complex.
  Typical categories should include things such as rent, utilities and personal items for expenses, while revenues may include salary, pension and social security. 
  Expensive hobbies or other specific items such as "gas" make sense as a subcategory.
• Have an overall goal for savings. Wright said goals can be set weekly, monthly or yearly depending on needs. Marking a savings goal as its own category and laying it out makes it easier to see how to best obtain the goals.