Don’t Budget Just Spend – but with a plan!

Budgeting is one of those things that can be compared to cleaning your house…you know the benefit of doing it but getting started always seems like such a chore (pun intended). Just like cleaning your house gets easier over time, the more you use a budget to manage your income and expenses, the easier it gets. If you want to embrace the idea of living by a budget, consider it your spending plan. I think the term spending plan helps communicate that you will spend some money with your new plan…maybe even on something fun. So, from this point forward, we’ll refer to our budget as a spending plan (shhhh it’s our little secret). Here are a few steps to help you develop a workable spending plan:
1. Decide if you’re going to make a monthly or biweekly spending plan. Consider matching the plan to your pay cycle.
2. Make a list of all the items that require funding; list everything from household expenses to children’s weekly allowance.
3. Divide your list into categories:
a. Household expenses: Can include rent/mortgage, utilities, cable, cell phone, internet, groceries, child care fees, school tuition.
b. Auto expenses: Car Loan, auto insurance, fuel, and maintenance.
c. Investments/Savings: Savings and investment contributions for adults and children
d. Credit Cards and Loans: this should include entries for any credit cards you pay monthly and any loans you may be paying off.
e. Personal expenses: This can include weekly allowance, money for hair-cuts or the beauty salon, dry-cleaners, dining out, etc. Items in this category aren’t usually fixed and can be changed to meet the needs of your spending plan.
f. Charitable contributions: if you give to your local church or other organizations, your spending plan is a great place to capture those charitable contributions.
4. Now it’s time to add numbers to your line items. Input your realistic numbers (check your expenses from last month) and begin subtracting these expenses from your income, which is the first line item on your spending plan.
Each pay cycle should have a spending plan already prepared and ready to execute before the income is received. This preplanning will help avoid impulsive spending which can easily hinder you from reaching your financial goals.
Budgets are like clothes, they may fit you perfectly for a few months, but you might also grow out of them. Don’t be afraid to go back to your budget and tweak it a little to fit your needs and wants a little better. If you need help with your budget, struggle with impulsive spending, reach out to us…we want to help you reach your financial goals.

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