Putting your monetary objectives in writing can make them appear more tangible and attainable. It’s easy to let everyday purchases and commitments hinder you from saving for the future, however. One of the best ways to ensure your day to day spending behavior doesn’t overpower your life goals is to make a spending plan. You too, can spend money wisely, get out of debt and save for the future when you follow the strategies for creating a spending plan below.
Foolproof Method for Creating a Spending Plan
Step 1: Identify Income
Create a worksheet listing all the sources of income for your household: wages, bonuses, overtime, investment income, child support, alimony … everything that puts money in your pocket. You can use the tools provided at www.CalendarBudget.com to help you with this step. Feel free to form your own categories and make “best guess” approximations for certain amounts.
Step 2: List Expenses
Record all your standard monthly expenses, taking into account any funds that you splurge on pleasurable things like eating out, entertainment or leisure pursuits or any minimum payments that you have to make towards your debts. Again you can use www.CalendarBudget.com to make this step easier. To make an allowance for enough planning time, make your spending plan before the start of the month.
Step 3: Compare Income and Expenses
At the end of the month, check what you spent your money on and match it up to your income. Shocked? Now it’s time to sort out your bill paying and fine-tune your flexible spending. What can you reduce? Let’s say you want to cut your food budget by ten percent: eating in more will help you get there. You can get some more savings ideas at www.CalendarBudget.com.
Step 4: Set Priorities and Make Changes
Create a worksheet listing your short, medium and long term goals, the dollar requirements for achieving them, and suitable timeframes. It’ll help to have a precise and clear plan of what it’s going to take to get you to those goals when it comes down to the tough spending decisions. More importantly, this worksheet will let you know how close you are to the next big payoff.
Step 5: Plan for “Murphy’s Law”
Murphy’s Law is the idea that anything that can go wrong will do so at the worst possible moment. Offset this by adding a further ten percent to your spending plan.
After you’ve gone through these five steps, put any remaining cash towards paying down your debts. Don’t worry if your first month doesn’t go as planned. Creating a spending plan is a process and fine-tuning is essential. Make a new spending plan at the start of every month, and prepare to adjust it during the month. You plan needs to be flexible, or else it will not work.
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