In this episode of Inside a Financial Plan, we use Rachel and Dion’s household to show how a financial adviser approaches budgeting, using PocketSmith to track cash flow and align spending with a financial plan.
Rather than focusing on complex spreadsheets or rigid rules, this session walks through the practical way advisers help households build visibility, consistency, and better financial habits using real data.
Rachel and Dion’s Cash Flow
When a financial adviser approaches budgeting, the first priority is clarity. Using Rachel and Dion’s household as the example, Jess focuses on tracking income and expenses accurately so the numbers reflect what is actually happening day to day.
The aim is not to use every advanced feature PocketSmith offers, but to keep the system simple enough to maintain. By clearly seeing how money flows through their accounts, advisers can later review whether spending matches what was assumed when the financial plan was built.
This approach allows budgeting to support decision-making, rather than becoming an overwhelming task that gets abandoned.
Realistic Timeframes
A key part of how a financial adviser approaches budgeting is reviewing spending in a way that reflects real life. Jess explains that calendar months often exaggerate spending patterns, especially around weekends, holidays, and seasonal costs.
Using Rachel and Dion’s situation, rolling monthly and rolling quarterly views are used to smooth out these fluctuations. This makes it easier to see whether discretionary spending is genuinely off track, or simply concentrated in short periods.
By zooming out, advisers help households avoid reacting emotionally to one expensive week or month and instead focus on longer-term trends.
Transfers vs Spending: Getting the Data Right
One of the most important budgeting lessons advisers reinforce with Rachel and Dion is the difference between transfers and spending.
Money moved between accounts – such as saving for a holiday, topping up another account, or paying down a credit card – is treated as a transfer. Only money that is actually spent on goods or services is recorded as an expense.
Jess explains that miscategorising transfers inflates both income and expenses, making the budget misleading. Correctly separating the two ensures the data stays clean and useful for reviewing progress against the financial plan.
Automating the Budget With Category Rules
To keep budgeting sustainable, a financial adviser aims to automate as much of the process as possible. Jess shows Rachel and Dion how category rules allow PocketSmith to recognise recurring transactions and categorise them automatically.
By refining these rules over time, the system requires less manual input and becomes more accurate. Jess explains that advisers often let the system run for a month, then review it with clients to fine-tune categories and improve automation.
This reduces the ongoing time commitment to just a few minutes each week while maintaining high-quality data.
Managing Shared Bills and Irregular Spending
Shared expenses are another common challenge addressed in Rachel and Dion’s session. When one person pays for a group expense and others reimburse them, both transactions are categorised in the same spending category.
This allows PocketSmith to calculate the true net cost rather than overstating expenses. Jess also reinforces that no budget is perfect from the start. New expenses and categories will emerge once real spending data comes through, and advisers expect to refine budgets as life changes.
Key Takeaways
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A financial adviser starts budgeting by focusing on cash flow clarity
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Rolling views provide a more realistic picture than calendar months
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Transfers must be separated from true income and expenses
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Category rules reduce manual work and improve accuracy over time
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Budgets should evolve as household spending changes
Next Steps:
At Lighthouse Financial, we use PocketSmith with many of our clients because it connects your day-to-day spending to your long-term goals. Unlike a spreadsheet, it can’t be fudged – real data means real progress. Whether you’re managing a household budget or planning for financial freedom, PocketSmith helps turn your plan into action.
Try PocketSmith today and get 50 percent off your first two months.
If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
