Don’t Have a Spending Plan? Here’s a Start.

Pre-Owned Vehicle = Used Car
Refurbished = Broken, but it was fixed
Diet = Caloric Reduction Plan

Often times the name we put on something gives it a different connotation that makes it at least bearable. In that spirit, “Budgets” no longer exist, but don’t celebrate too quickly. The process still exists; we’re just going to call them Spending Plans. 

Whether your income is $25,000 or $250,000, spending plans are the cornerstone to a successful financial life. A good plan is not just your income minus your mortgage, car and cards – it must be much deeper than that and I’d like to give you five tips to developing a successful spending plan.

Write it Down

Nothing makes a spending plan more concrete than seeing it on paper or on the screen in front of you. The format is not as important as the information. Even writing income on one side of the paper and expenses on the other side is sufficient. At first, write your daily expenses down until you have a firm understanding of what you spend.

Do the Research – Don’t Guess

If your plan has more than a couple of nice whole numbers ($100, $75, etc…) you’re likely not doing it right. Look back at least six months (monthly chunks are easier to manage) and put every dime you’ve spent into categories. Examples of categories are housing, groceries, dining out, gym memberships, etc.

Manage it Daily

Yes, daily! One day of out of plan spending can likely be corrected. One week is a different story. Reviewing your spending plan daily will allow you to keep better track of where you’re spending and in what categories.

Make Savings a Debt, an Expense, a Bill, a Priority

Pay yourself first! Savings must become an expense – if not you’ll end up saying, “I’ll take what’s left over and save it.” What happens? Nothing ever seems to be left over. Pay yourself first and you’ll establish the habit of systematic savings. This is the key to long term financial health.

Don’t Leave out These Things

There are always items that we leave out of our spending plans. These are a few, fairly common omissions from spending plans:

Home repairs (suggested to allot 3% of your home’s value annually to this category), gym memberships, school lunches (for those with children), annual property taxes, auto maintenance (not just oil changes, cars have tires too), glasses/contacts, birthday gifts, holiday gifts, vacations, annual licenses, professional fees, movies, the list goes on and on.

Missing one of these items won’t have a huge impact on your plan, but missing four or five will have you wondering where your money went.

Consult a Professional (Bonus Tip)

Speak with a financial professional – if they charge you a fee, speak to a different professional. Spending thirty minutes to an hour with someone who is trained to help can make a world of difference. From analyzing your spending to offering a third party view, a professional can help you get a grasp on your plan.

Truliant has trained staff as well as certified financial counselors and planners to help with any of your financial questions. Simply put, we are committed to your financial health.

About the Author: Donnie Peaks is the director, deposit services for Truliant  and is responsible for all consumer and commercial deposit accounts and products (checking, saving, money market, certificates, etc.).