Recently, I had the opportunity to talk to a local resident about his family’s budget. He and I discussed the benefits of having a budget and what, ultimately, the payoff could be. Very quickly he pointed out to me that his wife would not agree to any budget because “she does not want anyone telling her how to spend her money”.

Many people, just like the couple above, have no idea what it means to have a budget. They want nothing to do with anything that resembles the word budget. Why are so many people afraid of a budget?

In dealing with my clients, I have had to learn to change my language or use of the word “budget”. People quickly turn me off when I talk about a budget. So, now it is a “spending plan”. Very simply, a “spending plan is a written plan to depict how we are going to spend.

On my way home today, I passed new subdivision after new subdivision. They were all at different stages. Some had dirt that was just being turned, others were farther along and obviously had some utilities laid out and streets paved. Still others were already in the process of building houses. One thing that was evident in each one - whatever the stage they were in, they were all executing to a plan. Something was written down and they were working to complete their plans.

Budgeting, oops, I mean a spending plan is a financial plan that we build and work towards. Unlike the lady above, a spending plan is a written plan of how we are going to spend our income. It is a process that puts a name on every dollar. It is, as John Maxwell has said, a way of us telling our money what to do instead of it (our money) telling us where it went.

For years my wife and I would sit down in December and put together our budget for the next year. The following December we would sit down see where we failed to hit the mark and wonder how we could do better next year. Year after year, we would fail in accomplishing our task of living by a budget.

Then I learned how to budget monthly. Like the mouse trying to eat the elephant, we learned a way of building a better plan and a shorter time period to live by it. Where we were trying to control of our finances over 365 days and we found it much easier to manage and control over a 30-day period.

One of the most powerful changes a person or family can make is to begin living within their means. Simply put, they finally decide to live on less than what they make. They build a plan that shows what they are going to bring in for a time period and before they spend a penny in that period, they identify where their income is going to be spent.

Almost every time a coach a client into a spending plan they feel they got a raise. Why? Because they are now controlling their spending and they have control!

See most of us just go about our financial lives having no idea what or where we are going. We bring home a check and before we know it the money has disappeared. We have all had the best of intentions at some point in our life, but when the money is gone it is gone. Statistics show us that we no longer save but live only for today.

Creating a monthly, zero-based spending plan is simple. Begin with what you anticipate coming in as income. That is the mark – we cannot spend any more than what we have coming in. From that start breaking down the payments that are needed for the month. Paying yourself, the mortgage, the car payment, groceries, blow money, - all expenses need to be put down on you plan. The intention is to wind up with $0 leftover. Every dollar has a name!

Some don’t want to do the extra work of creating a spending plan, others can’t agree to living by a plan and still others have no idea that the future is just around the corner.

So let me ask, how is your plan working?

Financial Focu$

www.myfinancialfocus.net

678-648-9940