Doesn't Spending Plan Sound Much Better Than "Budget"?

The truth of the matter is that what we do is spend.  We budget what we spend, but all in all it is spending.  Do you have a spending plan or a budget?  Budgets are restrictive in nature and NO ONE wants to tell their friends they are on a budget.  I mean really, it sounds so antiquated doesn't it?  Plus, then your friends think you are cheap.

At least my friends KNOW I am cheap.  You know who you are.  Actually I like to think that I am frugal, conservative, conscientious, even a good steward of the blessings God has given us.

Well, back to this spending plan business.  It's actually pretty simple.  Figure out what you spend on fixed items. Examples of fixed items are rent/mortgage, insurance, car payments, etc.  Things that you have every month. Sometimes the fixed items $$ amounts will change from month to month like your utility bills.  Fixed items are absolute, gotta haves in order to survive month to month.  I hear you now telling me that you don't know how to figure this out...just shoot me an email and I will send you a copy of a spending plan.  I am having trouble uploading one here in the format that Blogspot will accept.

Then figure out what you spend on non-fixed expenses such as dining out, coffee/donut stops, hair, nails etc.  These are things you CAN live without.  And don't tell me you can't.  Of course you can.  You CHOOSE not to...big difference.  The way to figure this out is to track your spending for a minimum of 2 weeks.  A month is ideal.  Yep this is work, but if you want to get a handle on your finances then a little effort is needed on your behalf.  Get a notebook, use an app, grab an envelope, whatever works and keep track of every single amount spent on everything.  After a 2 week period multiply times 2.  This will give you an idea of how much you are spending on a monthly basis.  Multiply by 12 and you have a year.  I know there will be some out there who are going to tell me that isn't correct....whatever.  It's close enough.  This is not an exact science and for those who think it is, well, sorry it's my blog hehehe

Lastly, pertaining to expenses, are credit card payments, rent to own places, etc.  What do you pay monthly? If you pay more than the minimum, great. If not, that is fine too (for now...more on that later).

So you take all those amounts and add them up.  Then subtract that from your NET  monthly income.  That is the bottom line amount of money that hits your checkbook every pay period.  Hopefully this is a positive number.  If it is not, then some adjusting needs to happen in your non-fixed expenses. You may need to cut back on coffee shop runs, not getting your nails done, etc.  You get the idea.

If you are in the positive and don't know where the money is going, take another look at your checkbook.  I didn't specifically address tithing or savings so that may be where the money is going already.  Also, if you have a positive cash flow, and know you have a positive cash flow, what are you doing with that cash?  Do you spend it because you have it?  A lot of us do that.  

But now the hard part begins. What to do with this knowledge?  What do you want to do?  Do you have any short term goals....vacation, new car, new outfit?  How about long term goals....house, retirement? This is all very personal and there is no one-size fits all solution.  Everyone will have an opinion on this, but your personality and family lifestyle will dictate in which direction you head from here.

Personally, I think everyone should have a savings account and a retirement account.  But what those magic numbers are for you are different from mine and your neighbors.  No one-size fits all and don't forget that.