If you were able to see my previous post about budgets then you would have seen this second step of setting up a budget or as I like calling it by the true name “Spending Plan”. I wanted to go into this step a little bit deeper so hope you enjoy.

Step 2:

What is your current spending like? From this point forward, start keeping a “Money Journal”. For a 30 day period right down EVERYTHING you spend and what it is spent on and money you receive. After 30 days, review this and trust me……you will see some patterns.

This a wonderful tool for truely knowing what you are spending your money on. A lot of people either don’t want to do this and think they already know where their money is going. They might have an idea but just don’t realize how much is truely spent. Others might not have any clue or just scared because of what they will find and not want to change. If you are very serious about wanting to change your financial future and learn TRUE financial freedom, then once you are done with step 1 of setting your goals……..now you are ready for step 2!

Many ways of setting up a spending plan, but need to find the way that fits your life style. Step number 3 will talk more about how to set up a spending plan but lets get you thinking about it first. Are you a paper person? Are you an electronic person? Are you a mixture of both? If you are in need of a general paper format of a spending plan then just contact me and I will send you one. For some online ones CLICK HERE. Good rule of thumb for putting down INCOME and EXPENSES.

Income:

1. Set up spending plan on a monthly basis. 

2. Put down the income you truly get….bring home.

3. Anything you get that is not cash. (e.g. grocery money, paid travel)

4. Tax refund or anything else you receive regularly

Expenses:

1. Set up your spending plan on a monthly basis.

2. From your money journal find out spending habits and what they equal per month. (e.g. coffee for $2,  3 times a week would be $24 a month)

3. Don’t forget about gifts, wedding, birthday, Christmas, other Holidays. (these are called spending plan busters because they are often forgotten)

4. Car and home maintenance. (you don’t get bills from these but always a cost that comes up)

I could spend a long time on the expense column and different people will have different things on this end, because this is the reason it is called a spending plan. Just remember, for this step you want to do the money journal for 30 days straight. Make sure to write down every single thing that happens money wise during those 30 days. After your 30 days you should be able to go back through your journal, put items into categories and try to stay away from putting too many things in miscellaneous.

Look for the next post in this series for different spending plans. Hope this helps

If you were able to see my previous post about budgets then you would have seen this first step of setting up a budget or as I like calling it by the true name “Spending Plan”. I wanted to go into this step a little bit deeper so hope you enjoy.

Step 1:

What are your goals? If you don’t know what you want to accomplish, it will be hard to make any accomplishments and know when you are successful of them. Also I like to use this analogy, “If you get into a car, you usually know where you are going to end up. If you don’t, well……either you are stuck in park or going to run out of gas.”

This step is truly the most important because when you are building a house, you definitely need a good solid foundation. With out a solid foundation, your house will crumble or will not be sturdy enough to build on. Need to make your financial house sturdy to build on so we start with goals. Going back to the car analogy, if you didn’t have a goal of where you were headed…..then you would be driving around and might run out of gas. With a goal or set destination, even if you get off your path, at least you know that destination you want to arrive at and might have to find a different path. You might ask, “Why do I need this, I am doing a spending plan?” Good question and glad you asked. Start by setting those goals that you are truly passionate about; saving money to {input what ever you are wanting to do with money}; traveling; stop working at age 55; putting my kid through college. These are just some examples, but YOU are the only person to know what is a truly passionate goal for YOU.

Here are some examples of goals and what to do:

Examples of goals categories: Life, Job, Spiritual, Health, Family, Financial, Education….etc.

Now, under each goal catagory make sure to set what the long term goal will be and several short term goals it will take in order to get there. Reason for this is if you wanted to retire by age 55……well that might be a long time away and you might lose sight of that goal. What you want to do is set up a few short term goals like having a certain amount of money put aside by a certain age. These will act like gas stations along the way of your journey to meet your end goal and a chance you can check your map and make sure you are going in the right direction.

WRITE YOUR GOALS DOWN ON PAPER, and if you are brave enough…….TELL SOMEONE about them. *WARNING* beware if you do this, you might actually accomplish your goals.

Why this works is because if you write it down the goals will be staring back at you from that piece of paper. If you tell someone, well, every time you see that person they will ask you how you are coming along on your goal. Most people want to show progress so either they will have done something towards their goal……….or they will run away from that person they told.

Hope this helps

I would consider this one of those items on the same shelves as losing weight. Here is why both of these topics have so many similarities:

1. Both are probably 20% technique and 80% the person.

2. There are a hundred ways to accomplish your end goals

3. There are some simple guidelines for accomplishing each.

Exercise the simple guidelines are: Eat less, exercise……..with many paths to get there.  Getting out of debt I think I have narrowed it down to only 3 simple guidelines which maybe could only be two: Earn more money, have less expenses and/or spend less, and sell items of value to increase income or have less expenses.  One way to get out of credit card debt would be the snow ball effect. If you have multiple debts, number one sell items of value or take out money in savings to pay down your most expensive debt with the least amount of balance. Lets use this example:

Credit card A has a balance of $2000 and interest rate of 10% Min. Monthly payment of $50

Credit card B has a balance of $2000 and interest rate of 7% Min. Monthly payment of $40

First you would do a spending plan and figure out how much month you can put towards paying down your debt. In this case lets say it is $200, so what you would do is pay the minimum payment on Credit card B of $40 and pay $160 towards Credit card A. Once you pay Credit card A off, then you will take that full $200 payment and apply it towards Credit card B. DON’T STOP HERE!!!……..Now you just freed up $200 a month for extra income…..please don’t go spend it! Instead, take that $200 a month and put it in savings or a retirement account.

Hope this helps

Stay tuned as I will have more money saving tips coming your way!

Ah yes…..the wonderful Fall leaves start showing there color, temperatures start getting cooler, and people who are involved with budget planning for the next year don’t get to see these things take place or start pulling their hair out because deadlines are approaching. Forecasting, trend lines, and predictions…..oh my! Yes, depending on when some company’s have the end of their fiscal year, either they have already went through this or about to. On this day I want to help those who are not doing a budget for a company but for their families or selves. First, I do not like the “B” word……Budget,  so from this point on we are calling it what it truly is…….a “Spending plan!”

I think we can break it down into 4 steps:

Step 1:

What are your goals? If you don’t know what you want to accomplish, it will be hard to make any accomplishments and know when you are successful of them. Also I like to use this analogy, “If you get into a car, you usually know where you are going to end up. If you don’t, well……either you are stuck in park or going to run out of gas.”

Step 2:

What is your current spending like? From this point forward, start keeping a “Money Journal”. For a 30 day period right down EVERYTHING you spend and what it is spent on and money you receive. After 30 days, review this and trust me……you will see some patterns.

Step 3:

Create the TRUE spending plan! This is were so many people leave items out either on purpose thinking it will not affect them or they forgot of some expense that only occurs once or twice a year. You need to set up ALL EXPENSES and income on a 12 month payment plan. (example: insurance payment is $1200 one time a year, then for your monthly spending plan this will be an expense of $100 a month, same thing for any income) As I said before….don’t forget about the little things and the reason you did a money journal before getting to this point. Did you remember to put down that $2 for coffee, $1 candy, $1 soda pop, $1 newspaper or magazine? If these are regular items that you always spend on per day…..that just equals up to $5 dollars per day……$25 per week……..$100 per month…..$1200 per year! What would $1200 per year look like for your savings account, retirement, or your passionate goal you never have known how to find the money to do……hmmmm.

Step 4:

Implement and Execute! This is where a lot of people either start but do not finish, never start, or just put off and will do later. You can go through this whole process and it looks good on paper, but this is a matter of success or failure. Do you stick to your limits or push over them because of a WANT and not a true NEED? There are several methods and ways people use to help with the hardest part of anyone’s plan……..the HUMAN part. Be watching for later posts on these techniques.

These are just some basic steps and there is sooo much more information for each one of the steps. Everyone is aways looking for that next magical or easy way to help with their spending plans, but it comes down to only 3 things anyone can do:

1. Earn more money

2. Spend less money

3. Sell things you owe on or own to get expenses down

The amazing thing with a persons spending plan and getting out of debt, is about only 20% or even less it technical…….80% is the person themselves and what is in their heart or mind.

Please feel free to contact me with any questions on any of these steps as this is part of my volunteer work I do with helping people and their spending plans.