Have you ever felt like you're walking on a treadmill
with your personal finances - doing a lot of work but
not getting anywhere? If so, you may need a spending
plan to get back on track. A spending plan is a tool for
prioritizing your financial goals and managing your
money to reach them.
We're all familiar with the way small, daily expenses
can consume a $20 bill in the blink of an eye. But have
you ever really kept a record of where your money
goes? Tracking your spending for a month or two is the
first step in developing a plan. When you write down
an expense, put it in one of these categories: fixed
(insurance premiums, mortgage payment or rent, car
loan, etc.); variable (food, clothing, entertainment,
utilities, etc.); or savings/investments.
The other side of the equation is money coming in.
You'll want to list all incoming funds for the same
period you track your spending. Include all the
money you received, including your salary, child
support, tips, and gifts.
Once you have these records, a monthly spending
plan that matches your income and expenses can be
developed. The most workable spending plans:
- Limit monthly allocations of expenses, including
savings, to available after-tax income
- Set aside money each month for larger expenses
that are paid sporadically during the year
- Give each person in the family the flexibility to
spend a certain amount as that person sees fit
(a personal allowance)
- Are updated for periodic hikes in insurance
premiums, property taxes, and the like
- Provide a cushion for unforeseen expenses
Having goals is one issue; reaching them is another.
You know your financial priorities - we can help you
develop a workable plan for making sure they're met.