So you’ve started tracking your budget, congratulations!  But now, you may be second-guessing a few of your category choices, or find yourself going over-budget each month. We’ve complied a few tips to help you get back on track.

Here are a few of our favorite “I’ve started budgeting, but now what?” budgeting tips:

• Budgeting software often has trouble correctly categorizing a few expenses, specifically towards the beginning of use.  Take a quick look at your transactions and identify and correct those that are mislabeled. If you are using Mint.com or an online version of Quicken, be sure to take advantage of their easy to read ‘trend’ or reporting sections.  You can see where you’ve spent money over specific categories in charts that allow you to drill down to the transaction level, helping to spot inaccuracies. If you are not using budgeting software, compiling data from your receipts and statements will be a good way to get started.  Remember, you are trying to identify where your spending money and look for ways to reduce spending, if necessary.
• Revisit the items you have budgeted.  Now that you have been tracking for a few months or longer, are your budgeted items realistic? Maybe some adjustments need to be made to common expenses like household utilities, food and dining, transportation costs (including gas and regular maintenance), and discretionary (misc. spending).
• It is common for your expenses to fluctuate over time and for some expenses to occur only during parts of the year.  Some items, like car insurance, homeowner association dues, and professional fees may be paid quarterly or semi-annually, so be sure to include those expenses in your budget now.
• If you are spending more than your budgeted amount on a regular basis, take some time to plan out ways to reduce your spending.  Little things like taking your lunch to work once or twice a week, making coffee at home, or planning errands around one trip can all add up over time.
• Have you had any lifestyle changes that should be reflected in your budget?  A home purchase, renovation or new child can increase (or decrease) spending and should be accounted for.  Adding new expenses to your budget while taking time to review your overall spending picture can help set you back on track.

For our current clients, we are available to help answer questions that you may have about Mint and Quicken.  We may also be able to assist you in starting the expense tracking process from the very start.  Please contact Heather Gudac at hgudac@financialsymmetry.com if you are interested.

Cameron Hendricks

Financial Symmetry recently expanded our Operations Department by adding Cameron Hendricks to our team as our new Data Specialist .

Cameron joins the firm after participating in FSI’s financial planning internship program in the spring of 2010. He recently graduated from NC State University with a B.S. in Business Administration, Finance, with a minor in Accounting.  As Financial Symmetry has continued to grow, so has Cameron’s role within the company.

Cameron’s responsibilities include supervising data collection and processing for our clients’ accounts, developing new processes to manage incoming data, and assisting our advisors with wealth management reporting. Cameron also supports our team’s cost basis reporting and tax preparation services.

He is looking forward to improving and establishing new data processing procedures that will benefit FSI’s clientele in each of their fee-only services- financial planning, investment management and wealth management.

Financial Symmetry, Inc. has recently promoted Heather Gudac to Operations Manager.

Upon graduation from NC State University with a B.S. in Business Management – Finance, Heather joined Financial Symmetry, Inc. (FSI) as their Operations Specialist and Office Manager in 2008. She began her career with the firm as a financial planning intern in late 2006.

As Financial Symmetry has continued to grow, so has Heather’s role within the company. In addition to her responsibilities of assisting with portfolio administration and growth management, and overseeing the company’s internship program, Heather’s new position includes managing a growing operations team. Working closely with FSI’s advisors, Heather coordinates new account transitions, supervises account maintenance and guides our clients though qualified account rollovers and distributions processes.  Heather also assists FSI’s primary advisors with financial planning projects by gathering and organizing data through client communications.

Heather maintains her position as FSI’s office manager, handling the day-to-day operations within the company. Going forward, she is looking forward to improving and establishing new operational processing that will benefit FSI’s clientele in each of their fee-only services- financial planning, investment management and wealth management.

For more information about Heather and what she does for Financial Symmetry, see her bio on our main site: http://financialsymmetry.com/our-team/heather_gudac/ or contact her by email, hgudac@financialsymmetry.com, or by phone, (919) 851-8200 ext. 205.

Ready, Set, Go!

Many of our clients ask us, “is there a better way to track our budget?” Our answer is “Yes!”

We often suggest  Mint.com for it’s ease of use.  The online tool is free, very secure and relatively easy to learn. We find that it is helpful for those that have tracked a budget for years as well as those that are just getting started with budgeting.

Here are a few points to help you get started.

Why should I use Mint.com?

Mint.com is a free, online account aggregation tool that can help you plan, manage and stick to your budget. Setup is quick and easy—you can expect to have your accounts linked to Mint within a couple of minutes! Security is good, being at or above most institutional banking websites.

Mint never asks for your account numbers, name or other personal identification information. Money cannot be accessed, moved or transferred within Mint, and all data stored at Mint is backed by bank-level data security protections.

How many categories should I use and what are they?

Some common problems we see are trying to over-categorize and coding a large amount of regular expenses as one time occurrences.  Simplification should be emphasized when creating your budget and categorizing each transaction.  We recommend using the following categories in a combination that fits your household:

• Auto & Transport
• Bills & Utilities
• Food & Dining (Groceries, Restaurants, Coffee Shops)
• Gifts & Donations
• Travel (Vacations, large trips)
• Everything Else (Cash, Fun, Church/Charity Contributions)
• Food (Dining Out, Alcohol, Groceries)
• Debts (Mortgage, Equity Line, Car Payments, Credit Card or Student Loan Payments)
• Education (Books, Private School, College Tuition)
• Health & Fitness (Gym Membership, Doctor Visits, Prescriptions, Insurance)
• Home (Maintenance, Home Improvements, Furnishings)

From these basic categories, you can create future sub-categories, but it is important to keep the bigger picture in mind when monitoring your expenses. Keeping broad categories may also help speed up maintaining the data that Mint is able to aggregate between your accounts.

Should I be trying to hit the same number every month?

Comparing expenses on a monthly basis can be another source of frustration as there are many fluctuations that occur throughout the year (Holidays, Summer Vacation, etc.).  Therefore, it is important to measure your progress against a rolling year period.

For example:  If the month of May has just ended, you will want to measure June 1^st of last year to May 31^st of this year against the calendar year amount of your budget.  If the amount is more, then you know you are a little ahead of pace and you should scale back.  Performing this exercise monthly or quarterly can greatly improve your overall financial picture as it allows you to have greater control over your regular expenditures.

If you are interested in learning more about starting a Mint.com account, or have questions about your current Mint.com account (transaction coding, setting the right categories for your household, etc) feel free to contact Heather Gudac at hgudac@financialsymmetry.com or by phone, (919) 851-8200 ext. 205.

Photo Credit: ingridesign

Add to your nest egg!

Have you made your 2010 Roth IRA contribution?

If you have not yet made the maximum contribution, and are eligible to make contributions, you still have time!

Tax payers have until April 18^th of 2011 to make their Roth contributions for the 2010 tax year.  If you are within the income limitations to make contributions, a Roth IRA is an excellent investment account as investment growth is tax deferred and withdrawals in retirement can be tax free.

For 2010, single filers are able to fund their Roth IRAs with 100% of the contribution limits if their income is below $105,000.  Their amount of contribution availability drops if they are above the $105,000 and are phased out completely at $120,000.  For Married Filing Joint taxpayers, income restraints begin at $166,000 and end at $176,000.

Looking forward for 2011 contributions, contribution limits for this year have stayed the same as 2010.  This includes the limits for the Roth and Traditional IRAs and the majority of employer sponsored plans such as 401ks and 403bs. A very good practice is to contribute enough of your salary to receive at least the employer match.  Also, pay raises often present an easy opportunity to increase your deferral, while reducing your adjusted gross income.

The contribution limits for nearly all types of retirement plans are listed in the following chart:

Our wealth management service monitors your income and determines every year how much you should be contributing to each of these investment accounts.  It also reviews your income tax and estate picture, which may provide opportunities for tax savings.  If you are interested in this service, please contact us.

Photo credit: Scott Willis.

Many of our newer clients have come to us with old 401(k), 403(b), 457 and Simple IRA accounts from previous employers.  Some even have multiple IRA accounts, often from past rollover situations.  It’s important to have qualified professionals to help you decide on what to do with your inactive qualified plan and multiple IRA accounts.  Whether you are changing jobs, entering retirement or simply wanting to consolidate your accounts, we can help you with each step of the rollover process.

Should you always Rollover a 401k?

There are a few options for dealing with an inactive qualified plan including:

• Rollover the account into a self-directed IRA account, such as a traditional IRA.
• Rollover the account into a new employer-sponsored plan, if allowed under your current plan’s rules.
• Rollover the account into a self-directed IRA account, then convert all or a portion of the funds to a Roth IRA account (after careful tax analysis).
• Leave the account at the current custodian and bring your investment options in line with a comprehensive portfolio strategy.

Despite popular belief, it is not always best to rollover an old employer plan.  Certain custodians offer favorable investment options or have special tax provisions (the North Carolina employees’ Bailey provision, for example), meaning  it could benefit you to leave your account at the current institution rather than combining the funds into another account.

We have experience in dealing with many different custodians when it comes to the rollover process.  For our investment management clients, part of our service is to request and complete paperwork while monitoring the rollover process.  If you are interested in combining inactive qualified accounts, please feel free to contact us.  Your advisor will research the best approach for your individual situation and determine if a rollover is the best choice for you.  If it is, we’ll get the process started as soon as possible.

Not yet a client and unsure if a rollover is right for you? Contact us to schedule an appointment to review your financial picture and develop a plan that will help provide the answer.

Bill Ramsay, CFP®, recently participated in his fourth Triangle Business Journal roundtable event. The 2010 Financial Roundtable: Top Triangle Investors Dissect the Market was held at the Triangle Business Journal office on November 19, 2010.  The articles discussing the event appeared in the November 29, 2010 (part one) issue and December 3, 2010 issue (part two).

In years past, Bill has participated in the Triangle Business Journal’s roundtables on September 29, 2009, August 23, 2007 and July 18, 2006.

Please contact our office if you would like a print copy of the articles.

Is Deflation on it's way?

Many of us are familiar with inflation.  But what about deflation?  With it’s recent appearance in headlines, we thought it useful to revisit what deflation looks like.

Just like it is important to understand inflation, it is equally important to understand deflation and it’s potentially dangerous effects.  We came across a very detailed “visual guide” that helps to explain deflation from Mint.com

Check out the post by visiting  A Visual Guide to Deflation.

Photo Credit: FireChickenTA99

When checking up on your budget, it is important to look over a specific amount of time for comparisons to actual expenses. Comparing expenses on a monthly basis can be a source of frustration as there are many fluctuations that occur throughout the year (holidays, vacation, etc.).

Photo Credit: Jeff Keen

Therefore, it is important to measure your progress against a rolling year period.  For example, if you have been using a budgeting tool for one year or longer, you would want to compare from February 1, 2009 to March 31, 2010.  If you are just getting started, looking at smaller increments of time, like three or six months, can also be helpful.

No matter what your time frame is, here are a few tips to help streamline and update your budget:

• Budgeting software often has trouble correctly categorizing a few expenses.  Take a quick look at your transactions and identify and correct those that are mislabeled. If you are using Mint.com, be sure to take advantage of their easy to read ‘trend’ section.  You can see where you’ve spent money over specific categories in charts that allow you to drill down to the transaction level, helping to spot inaccurate transactions. If you don’t use budgeting software, compiling data from your receipts and statements will be a good way to get you started.  Remember, you are trying to identify how to spend less than you earn.
• Revisit the items you have budgeted.  Now that you have been tracking for a few months or longer, are your budgeted items realistic? Maybe some adjustments need to be made to common expenses like household utilities, food and dining, transportation costs (including gas and regular maintenance), and discretionary (misc. spending).
• It is common for your expenses to fluctuate over time and for some expenses to occur only during parts of the year.  Some items, like car insurance, homeowner association dues, and professional fees may be paid quarterly or semi-annually, so be sure to include those expenses in your budget now.
• If you are spending more than your budgeted amount on a regular basis, take some time to plan out ways to reduce your spending.  Little things like taking your lunch to work once or twice a week, making coffee at home, or planning errands around one trip can all add up over time.
• Have you had any lifestyle changes that should be reflected in your budget?  A home purchase, renovation or new child can increase (or decrease) spending and should be accounted for.  Adding new expenses to your budget while taking time to review your overall spending picture can help set you back on track.

A few of the new features include client stories, frequently asked questions and additional details of our services.

We invite you to browse our new website and hope you find it easy to navigate and helpful.  Feel free to leave comments!

Our new website is designed and managed by FatCat Strategies.