Overview of PFM Services

Let me begin by clarifying the differences between two common terms - personal financial planning versus personal financial management.  Personal financial planning typically involves sitting down with a financial planner and developing a plan that focuses on long term financial goals such as college savings, retirement, etc.  The plan will focus on the proper mix of investments based on the age and risk tolerance of the client.  Most investment portfolios will involve a mix of mutual funds, bonds, cash, etc.

Personal financial management involves the prudent management of one's regular income, basically "managing the household budget", which includes putting away money for college, retirement, etc.  I would imagine that in today's economy, more personal bankruptcies and home foreclosures were caused by a lack of proper personal financial management than by declines in one's investment portfolio.  Fortunately, living within one's means is becoming the new norm in our society, although many are struggling with this transition.

The primary step in improving the management of one's finances is simply knowing where your money goes.  This involves utilizing software such as Intuit's Quicken in conjunction with your bank's website to track and categorize income and expenses.  From that point, setting up an initial budget is a fairly quick and easy process.  A successful budget must have flexibility, as there are always unexpected events that cause budgeted monies to be shifted among categories.

Many people often avoid a budget, comparing it to a diet and claiming that they can't stick with it for the long term.  It is true that a budget is a sort of "financial diet", but one must realize that both diets and budgets can be tailored to the needs of the individual.  Just as the diet for someone who needs to lose 5 pounds would be different than someone who needs to lose 50 pounds, a budget for someone who can easily meet their financial obligations but wants to have a little more savings would be different than the budget of someone facing personal bankruptcy.  In both cases however, the process and principles of establishing a budget are virtually identical.

Another key element of personal financial management involves making good decisions with one's money.  The budget process provides information that allow's one to see where money can be saved or shifted to higher priority categories.  In addition, there are hundreds of money saving strategies, everything from ways to cut your food bill to how to save on car insurance to eliminating banking or investment fees.  The list is limitless.

In the coming weeks, this website will be offering an inexpensive package of information that includes step-by-step instructions on how to set up and maintain a budget using Quicken software, along with a wide variety of information to assist with living within your budget as well as saving for the future.

As an FYI, the Financial Links webpage includes links to several websites that offer services and ideas that can save you money.