Why do I need to have a spending plan?
Why do I need to have a Spending Plan? What even is a Spending Plan? Isn’t it just a sheet with my expenses on it? First, let’s make clear what a Spending Plan is and what it is not! A Spending Plan is a plan for how you want to spend and save the money you have. Read that again. It’s that simple!
The most important thing a spending plan does is allow you to count the cost to see if you have enough money to make it through the month. It is as eye-opening as putting on reading glasses for the first time; you can finally see your situation clearly. Creating your spending plan allows for that moment of realization, and shows you how to change your ways to keep your finances balanced.
Few of us start out in life living on a spending plan. It is something we learn to do out of need. We all wonder, what is so difficult about managing money? There is a long list of reasons why using a spending plan can be challenging:
First, life is unpredictable. You never know when an unexpected expense will be thrown your way; a sudden car repair, a trip to the vet or the doctor. There is an infinite number of expenses you can encounter in life that you never see coming.
Second, life is full of choices. We need to carefully evaluate how to spend the money we have. When it comes to managing money, patience and discipline are key.
Third, we focus more on things we want now and less on things we will need in the future. For example, money to cover college costs or to pay for retirement. It is important to maintain a balanced plan for funding both your current wants and needs, and your future financial needs.
So what is the point of living on a Spending Plan? It puts you in control of how your money is spent. In truth, once you use a spending plan and start to get control of your money you will likely worry less about money, and will start to reach new financial goals.
There is one more important observation I want to share with you, the financial systems in this country are inconsistent and unbalanced, yet banks, mortgage companies and financial advisers expect you to be consistent and balanced in how you handle your money. So your goal should be to “Become Financially Balanced in an Unbalanced World”, the key to doing that is to live on a spending plan!