What’s a Spending Plan?
Today we’re talking about the dreaded…..budgets.. I promise this doesn’t have to be something you hate or feel like is a negative thing. In fact, it’s actually the opposite! A budget allows you to create a plan so that your spending aligns with your goals and you won’t feel guilty.
I feel like many people view a budget like going on a diet. NOBODY wants to be on a diet and we all know that diets don’t typically stick. Instead, you slowly change your habits to eat better and eventually it becomes your lifestyle. Budgeting is much the same. If you make an overly restrictive budget for yourself, you’re never going to stick to it.
I don’t know about you but I don’t hate my life and I want to have that cookie or buy those shoes! Now, I’m not going to eat an entire plate of cookies or buy 8 pairs of shoes, but allowing my budget for some fun purchases, means I don’t feel guilty when I do buy those things and I’m more apt to stick to my spending plan.
That’s another thing, if it helps you. Don’t use the word budget, use spending plan. Because that’s exactly what you’re doing. The goal isn’t to spend no money, that’s nearly impossible, but you want to be intentional with your spending and make that plan ahead of time.
When you first get started, you’ll likely have no idea what you spend on many things. I recommend taking your first 30 days, simply to track your spending. Keep track of your transactions and what that money was spent on. Categorize your spending so you can have a good idea of what you spend on things like groceries, gas for your car, eating out and other fun money type expenses.
Knowing where you are currently spending your money, will allow you to determine where you can cut back and re-prioritize. So then in your second month, you can then start setting goals and creating your spending plan to include those goals. Maybe in your first 30 days you noticed you spent a lot on eating out and you really want to have an emergency fund. When making your plan for the second month, create a goal to spend less eating out and instead put that money into a savings account.
Like I said, start with small changes and continually make changes each month until you’re happy with where your money is going. This will help you keep a positive mindset towards your budget and your money and you won’t feel like you’re giving up so much. It won’t always be easy and you’ll make mistakes, but the important thing is not to dwell on those mistakes and keep moving forward.
So now, you’re probably wondering where you keep this budget and how you track all of your transactions. There are lots of different ways and a million different apps you can use. To keep this simple, I’m going to share with you 3 ways that I think are great to use for your budget.
Spreadsheets
Using a spreadsheet is great because it’s free and you can make it however you want. The possibilities are endless! The downside, if you aren’t familiar with how to create a budget starting from scratch can be overwhelming.
This option is where I can help. I have templates that I can cater to your needs to make it as easy as possible, if this is something you would like.
EveryDollar - App
This is a great app with a free option where you enter in your monthly income, budgeted expenses and then add your transactions throughout the month. It’s pretty easy to use and set up. The free version is manual so everything needs to be entered by you.
There is also a paid version (with the first 2 weeks free) that gives you the ability to link to your bank account and allow it to auto populate your transactions. This also gives you access to Financial Peace University that teaches you some ways to help get out of debt.
The downside to this paid option is the cost of $129.99 annually. However, I think the free version is a great way to get started.
You Need A Budget - YNAB App
If you’re going to use a paid app, this is my recommendation. I started using this a couple of months ago and it has seriously helped me focus on what my priorities are and match my spending to them.
You get the first 34 days of use for free. Having a full month (or over, really) gives you a chance to get used to the app and understand how it works before committing to it. With the cost of this being $83.99 annually, it’s a bit cheaper than EveryDollar.
What I really like about YNAB, is you budget only what you have. This is different than what I’m used to and I wasn’t a fan at first but now I’m obsessed.
You can create goals to help you save for things you want and you can easily see what you currently have to spend and what you need to adjust if you want to reach your financial goals.
But at the end of the day, whatever works for you and you are able to stick to, is what’s best. It might take a couple tries to figure out what you prefer and it’ll take a couple months to really hone in your budget plan, but I promise it’s so worth it.
The freedom you’ll gain by having a budget that aligns with your long term goals and allows you to spend money on the things that bring you joy, will help you have a more positive mindset towards money.
