I'm not a fan of the “b” word – budget. I think most people have a hard time sticking with them. It’s a word that reminds me of diet. It feels like a punishment. And something you’re going to do for as short a time as possible.
But I do think it’s helpful to take a broad brush of your spending. I thought this breakdown of spending was unique and made it sound a little more exciting:
1. Tomorrow’s Treasures - what are you saving for the future (retirement, family adventure, college tuition)
2. Past Promises - what commitments have you already made (mortgage/rent, utilities, car payment)
3. Today’s Joy - whatever is left over after Tomorrow's Treasures and Past Promises (dining out, designer clothes, theater tickets)
You can decide to be successful with money – the key word here is DECIDE. We all know what we need to do to be successful when it comes to physical fitness: eat less, exercise more. When it comes to fiscal fitness, we all know what it takes to make it work: spend less, save more.
This is HARD!!! Nobody is saying this is fun or easy. And guess what – no matter how much money you make, this applies to you. There are couples making $1 million a year spending $1.1 million a year, going deeper into debt all the time. I’ve seen couples making $120,000 a year, spending $100,000 a year and debt free.
What are your priorities? What's most important to you? What can't you give up? What CAN you live without?
To calculate your cash flow, you take the inflows minus the outflows. The goal is to have it be a positive number!
Your inflows are any sources of income you are receiving. Outflows equal your spending. Take a look at these numbers. Use whatever format, spreadsheets, apps that work for you.
How are you spending your money? Which of these things is bringing you happiness? I love getting my house cleaned. That seems to be the number one answer for many women. Other examples are mani/pedi's, getting the lawn mowed or having your groceries delivered.
What questions came up? Were you surprised by anything? Does your spending fit with your money values? Are there changes you could (should) make to help you achieve your goals?