Financial expert: 'It's crazy that people don't have a budget'

People are living paycheck to paycheck because they don’t know where their money is going, according to Paul Schatz in a conversation with Yahoo Finance recently.

“I think it’s crazy that people don’t have a budget,” said Schatz, president and chief investment officer of Heritage Capital Group, a financial advisory firm.

While he admitted that budgeting is “boring and mundane,” his concerns resonate with earlier studies that show that only 2 in 5 Americans utilize a budget to watch their finances. More than a quarter of those who don’t use a budget say they don’t think they need one.

 (Photo by JEFF KOWALSKY/AFP via Getty Images)
Experts recommend people balance their portfolios at least once a year. (Photo: JEFF KOWALSKY / AFP)

How can you budget?

While fancy budgeting apps are available to track your spending, experts recommend a simple written list as a starting point.


“Work out some type of budget where you list your streams of employment, rental property, and core expenses,” said Christopher Zappy, financial advisor at Morgan Stanley. “Look at what you don’t need such as clothes, luxury, going out to eat, and even perfumes or colognes and think about saving.”

If you want to make things even easier, automate your savings, he said.

Rebalance retirement portfolios

Schatz offered other financial tips for 2020. People should also remember to rebalance their 401(k)s.

“People spend all this time setting out an allocation: 80% stocks and 20% bonds,” Schatz said. “They set it and forget it.”

He recommends rebalancing your portfolios at least once a year, if not more. Not doing so could harm your retirement goals.

Senior couple paying bills at home
Paul Schatz, a financial expert, recommends rebalancing your retirement portfolio at least once a year, if not more. (Photo: Getty Creative)

“Stocks [were] up 30% last year and bonds had a great year too, but your stock-bond allocation now [could] be out of whack,” Schatz said.

Baby boomers may be the worst culprits. More than a third are overly invested in the stock market. Fidelity recommends those nearing retirement should only have about 53% of their portfolio in stocks.

You should also routinely check your retirement portfolio when you’re younger, especially when you switch jobs. You don’t want hefty management fees eating away gains in a portfolio you stopped contributing to years ago.

“It’s not terribly uncommon for someone to forget,” said Brandon Renfro, assistant finance professor at East Texas Baptist University. “People just don’t think [about] the rollover.”

A screen displays the Dow Jones Industrials Average after the close on the floor at the New York Stock Exchange (NYSE) in New York, U.S., January 15, 2020. REUTERS/Brendan McDermid
Financial expert Paul Schatz says "don't run from the stock market" in 2020. (Photo: REUTERS/Brendan McDermid)

‘Don’t run from the stock market’

Among his other financial tips for the new year, Schatz warns investors from running away from the stock market and withdraw all your investments.

Despite almost 1 in 5 stating their top financial concerns for 2020 remain how the economy, stock market and interest rates will perform. If anything you shouldn’t base future performance on just one or two recent events.

“You [may] have an outlier month here and there,” Schatz said in reference to recent outflows from bond funds. “Look at three years data how could all these people take their money out of stocks repeatedly and put it in bonds.”

Dhara is a writer for Yahoo Finance. Follow her on Twitter @dsinghx.

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