Do 6-Figure Professionals Need a Budget?

Posted on: August 17, 2022

By Sheila Walkington, CFP®
Co-founder and CFO Money Coaches Canada

I know it’s only the middle of August, but “back-to-school” season is upon us. I always remember my mixed feelings of dreading the end of the summer but the excitement of new notebooks, pencil cases and fall clothes. Even if you don’t have school aged children or school is a distant memory for you, the fall is a natural time to start afresh and review and revisit your financial goals.

It’s a perfect time to not only look forward and set goals, but to also reflect on how far you’ve come. Looking back at the progress you’ve made over the past 12 months may not seem dramatic, but if you consider the past 10 or even 15 years, so much has likely changed, especially in terms of your career and income.

When you were starting out, you probably had a pretty simple financial plan – pay the bills so the lights stay on. Going out to the movies may have meant you’d have a smaller bag of groceries that week, and you may have dreamed of the day when you’d reach a level of success that you’d never need to budget again.

But like the child who dreams of eating chocolate all day when they become an adult, it isn’t such a good idea when the moment arrives. Now that you have achieved a level of financial success, you probably have a lot more reasons to stay on top of your finances.

You may also be feeling the impact of recent increases in interest rates and higher prices for gas, groceries and travel and don’t want to start slipping behind financially.

So, do 6-figure professionals need a budget?

Not if your idea of a budget is restriction and inflexibility.

At Money Coaches Canada, we’ve created a Spending and Savings plan, not as a euphemism for the word budget, but as a tool that keeps you engaged with your money. Engagement fosters informed decisions, and informed decisions will likely be in your best interest long-term.

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. They don’t have to choose between groceries and a movie anymore, so they may stop worrying about day-to-day spending in general. The catch is this: with success comes different reasons to pay attention.

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 – 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 as financially successful as Tesla’s Elon Musk, you need to pay attention if you want all these things to be possible without going into debt.

What is 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. This is where you get started.

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 needs to be sacrificed. 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.

If you need help navigating your personal financial path, a Money Coach may be the answer. Check out the bios of our Money Coaches, and then request a complimentary initial consultation.

Category(s): Budgeting and Cash Flow, Money Coaching, Relationship to money
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