I’ll make this short and sweet: budgeting to the minute detail doesn’t work for everyone. Typically, people who are “spenders” in the first place are not truly detail-oriented in their lives. Setting a budget out for each dollar they spend is not going to be successful because one issue (i.e., you realize at the store that you need plastic baggies for school lunches) could break your grocery budget for that week. If you accidentally forget to plan for each detail you feel like you’ve failed and resolve that budgets don’t work. Here’s something I’ve found that does seem to work:
A solution to help spenders get on track is to create a “spending plan.” The first step in this is to keep track of your monthly expenses… either using an app for your mobile device or a simple pen/paper. Recording it and being real with yourself about it are your first steps. You can also set your priorities straight once you know where you’re at each month. Maybe it’s time to truly give up cable? We did and it was the best decision we’ve made- not to mention a savings of $1,440 a year.
Financial tip: So how does a financial planner manage the spending in his household? Good question. For my wife and I, I opened two checking accounts: Billing and Spending. The billing account is where we have our bills automatically debited from each month and where I deposit my paychecks. The spending account is the debit card we use at the grocery store, restaurants, etc. When the end of the month is approaching and we want to take the family out to eat, if there isn’t enough money left in the spending account, we don’t go and wait until the next paycheck comes in to fund the spending account again.
Do you have a financial four-letter word you’d like to erase from your vocabulary? Call me to schedule a free consultation- 913.402.6099 or visit our website for more information, www.chladekwealth.com
John P. Chladek, MBA, CFP® is the President and Founder of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals. For more information, visit https://www.chladekwealth.com.