Are you a person of your word? Do you keep your promises to people? Can you keep your promise to yourself to achieve the financial goals and plans you set for yourself?
We all have goals. That’s for sure. And this is true, especially with our finances. You may want to buy a home, go on vacation, plan for retirement, pay off debt, etc. The question is, what are you doing to achieve them?
The critical step in financial goal achievement is planning! And, what’s the first thing that comes to mind when you think of financial planning?
The “B” Word: Budget!
Many people hate to hear the word budget as it reminds them of a “diet” and feels restrictive. So, I like to use the words “spending plan” instead.
When strategizing for our “spending plan”, we must treat our household economies like a business. We should be forecasting, planning, tracking and making adjustments regularly.
Having a spending plan gives you control of where your money goes. You get to decide. How you achieve success is actually sticking to the plan. If you’ve ever been successful in any areas of your life, you know it took commitment, attention, focus, intention, support. This can happen with your finances!
Create a Successful Spending Plan
A great way to be successful in your spending plan is to make sure that ALL of your spending, big and small, is accounted for.
Collect all of the necessary financial documents:
- Pay stub
- Employee benefit documents
- Social security statements
- Utility bills
- Mortgage statement
- Lease agreements
- Car notes
- Credit card statements
- Student loan documents, etc.
Spend on Extras
When planning, most people focus on the “must haves” like housing, food, utilities, transportation, etc. But, they often forget about the “nice to haves” that bring them joy and add value to their life like entertainment, gift giving, coffee, etc. You are going to spend money on these things, so they must be accounted for and incorporated in your plan.
If you are not sure on what to include or what you actually spend money on, you may have to track your spending for two weeks to know how much you actually spend on these “extras.
Tools that can help you with tracking your spending are spending plan worksheets and personal finance management platforms.
You must remember, though, that your spending plan is never fixed. Once you’ve established your plans, tracked your expenses and selected the right tools, you also have to make adjustments to your plan as you go along.
I recommend completing a spending plan, track your expenses for two weeks, make necessary adjustments, then make future adjustments as necessary.
Remember, this is your plan.
Don’t worry about what you think you ought to do. Instead, focus on your goals, your needs and wants and try to find a way to incorporate all of them into your plan.
There are no absolutes, therefore you should find a plan that works for you.