If you are not maintaining a spending plan or budget to plan your household spending, you are not alone.  Many individuals and families are not, and many who think they are, are not.  

According to a 2019 report from the Certified Financial Planner Board of Standards, nearly 60% of people say that they don’t track spending, and another 40% have never had a spending plan or budget.   Among those who reported having a budget, 43% describe their budget as a tracking tool rather than a way to plan, in advance, where their money will go. 

Why We Fail

Creating a spending plan and its process involves more than recording receipts and tracking spending.  In our I want it now culture, we do everything we can to get what we want immediately and sometimes we leave very important steps out. 

We put the cart before the horse and wonder why it’s not working. 

A spending plan or budget is an estimate of how you will spend money during a given period. The more accurate we make this estimate, the better we are: 1. Able to stick to it and 2. The more successful we are at it.

Instead, do this

So instead of continuing to do that and expect a different result, try this.   Begin your spending plan process by tracking your spending for 3 months, 90 days. 

This doesn’t have to be a laborious and complicated task.   Some banks and credit cards will produce expenses and other reports you can use for this process. You can also turn to smartphone apps that will do this.  Once you see your spending history hopefully your spending habits will change also.   

When I am coaching clients through the spending plan process, this is the first step in the process. Every dollar for 90 days is tracked and recorded.

Next, you can take the three months of expenses, average them together, per category i.e., food, gas, and then plan the next month’s spending. It’s not perfect and exact but remember a spending plan is an estimate. How can we make the estimate closer to actual.

You are going to have to plan for those occasional expenses, the sinking funds, like car insurance.

When I am working with clients and they tell me that they do not have any discretionary money to spend, or I am living on a fixed income, my first response do you know where you are spending all your income?   

How can you not know where every dollar of your money is being spent but managing it effectively? 

I am a spending plan and budget coach, and I can help you create and stick to a spending plan that works for you and your family.  Like this post, share it with others, and contact me if I can help you.