Author: goldewj

A Household Budget Strategy

According to Peter Drucker, a management consultant, author, educator, and the described founder of modern management, one thing that beats strategy is culture.  Actually, Drucker said, ‘Culture eats strategy for breakfast.”  A good spending plan strategy, how you plan your spending or how you work your money, can be affected by your culture. 

I love the game of chess.  It’s an interesting and intriguing game in that you use the same pieces, but every game is different.  I also like that; It’s a game of strategy and planning.  That is because I believe a good strategy, or plan of attack, can do almost anything.  It can even help your spending plan. 

According to Peter Drucker, a management consultant, author, educator, and the described founder of modern management, one thing that beats strategy is culture.  Actually, Drucker said, ‘Culture eats strategy for breakfast.”  A good spending plan strategy, how you plan your spending or how you work your money, can be affected by your culture. 

Culture is defined as a shared understanding that emerges from shared experience.  Its customs, social institutions, and achievements of a particular people group.  I could go in so many directions here as research has shown that, for example, people get their financial advice from family and friends most often.  And these are the people who most often are our culture and help make your culture.  Just know that culture plays a significant role in how we manage our money.  It’s not right or wrong it’s just a factor.

Budgeting Strategy

One of my budgeting strategies is to consistently work with my spending plan so that I stick to it. Another strategy could you could use might be the 50 30 20 strategy made popular by Senator Elizabeth Warren where 50% of income is spent on needs, 30% is spent on wants, and savings makes up the last 20%.

Creating a spending plan that works, is a process and what I mentioned above should be done to help you in the process of making a winning spending plan.  Your strategy is how you go about the process.

Culture Trumps Strategy

Sometimes we can come to a place, for example, where we do not track our spending and do not stick to the spending plan and become so good at not doing what we know we need to do to manage our money better.  We actually prevent ourselves from moving forward with our money.  According to the Harvard Business Review, culture is the habits that allow for cooperation by assumption rather than by negotiation. Culture is not what we say but what we do.  Culture is based on values.  It is what we value that creates our culture.

When we do not Follow Through on Our Budgeting or Spending Plan Strategy

For whatever reason, when we don’t budget or track spending or do not follow up on the spending plan, you are allowing it to beat you.  Creating a spending plan that works for you and your family is a process.  Your strategy is how you go about the process.  How you tackle those things that need to be done to make your spending plan successful in your household. 

Do you have a Budgeting Strategy?

Suppose you are spending your money with a plan and tracking your spending and following through on your budget, great.  If not, the great thing about budgeting is that you can start today doing those things that will help you win with money.  And if you do not have a spending plan create one today. 

Share your spending plan strategy and subscribe to my blog and learn how to create a winning and manageable spending plan for you and your family.    

Tips for an Effective Spending Plan

Be Ready to Make Adjustments – Keep in mind that a spending plan is an estimate or plan of how you will spend or expend your money and plans change. 

Creating a spending plan or budget and then sticking to it can be quite difficult.  Even if it works on paper, for many it does not work well in practice and many people try and fail at budgeting.

And 38% of the population does not even try to create a spending plan. 

You can create a spending plan that works for you and your family.  Below are a few tips to help you create a better more effective spending plan.

Time is your Friend – Whenever you are working with a spending plan, you can choose to look at it daily, weekly, monthly, or within some other time constraint.  I recommend weekly, or monthly depending on when you get paid.

Reserve a specific time to sit down with your spending plan before you get paid and stick to that time.

For example, Sunday after church or Wednesday after work.

Use this time to get very familiar with your spending plan and expenses, and record when money goes out and when money comes in.  This time you spend working your money will get shorter the more you work it, but the key is to be consistent.

Set realistic spending limits – One reason why budgets fail is that there is not a realistic spending limit.  For example, you get ready to budget and plan to spend $400 this month on groceries.  Three weeks into the month, you realize you spent $420 with another week to go.

Some people will get frustrated and quit after they realize they went over their plan limit. 

It’s not the budget that is at fault it’s your unrealistic spending limit.  If you spent $500 on groceries last month, you are probably going to spend around $500 this month.  Be realistic with the limits you put on your spending.

Be Ready to Make Adjustments – Keep in mind that a spending plan is an estimate or plan of how you will spend or expend your money and plans change.

Be open and flexible to changes in the plan.  

When circumstances change such as when you get married or have a child or change jobs, your spending plan is going to need to change.  New spending categories and saving for college for the kids or retirement is going to possibly require changes to the plan.

What are your tips for an effective spending plan?  How do you manage your spending plan?  Subscribe to the GoldenRules Blog and learn how to create a winning spending plan for you and your family.

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Spending Plan Vs Budget: You Decide

I use the words spending plan because it creates a better feeling for the practice of you telling your money what to do and it not telling you what to do.  If you have a confidence issue with money, using the word spending plan can help eliminate some of that fear. 

I like to use the words spending plan when talking about money, financial management, and managing money better.

My reason for this is that the word budget has a negative effect on some of our brains and makes us think that we are limiting ourselves when we budget. 

In using the words spending plan, I hope it gives a feeling of control as you plan to spend your money, and you are telling your money what to do.

Some do not care what you call it.

I use the words spending plan because it creates a better feeling for the practice of you telling your money what to do and it not telling you what to do.  If you have a confidence issue with money, using the words spending plan can help eliminate some of that fear.

It’s your money, you earned it, and you are in control of it.  It works for you and does what you want it to do.  Tell your money what you want to do.

It is this train of thought that will calm the fear and help you thru the process of creating a spending plan that works and winning with money.

My definition of a spending plan is a plan for meeting expenses in a given period of time.  The word budget is defined basically the same way.

So, does it really matter whether you use, the words spending plan or budget to describe how you manage your money?

If you have a bad history or negative history with managing money, using the words “spending plan” could help you think differently about managing your money.

Managing money is about managing behavior and if the words spending plan helps you manage your behavior better when it comes to managing your money, great.

What are some of the tips and tricks you use to help you manage your money?  Subscribe to the GoldenRules Blog and learn how to create a winning spending plan for you and your family.

#GoldenRules #youneedaspendingplan #It’syourmoney

Spending Plan, Spending Plan, Who’s Got the Spending Plan

There are spending plans for startup businesses and budgets for corporations.  There are department spending plans and city, county, and state budgets.  There are even personal and family spending plans as well as vacation spending plans and monthly spending plans.  There are sales budgets and cash flow budgets.  There are even marketing and production spending plans.

So many spending plans and budgets…

Seems like if all of these spending plans and budgets exist and all different types of organizations and groups use them, there must be something about them that works.

When most people hear the word budget, what do they think?  What do you think?  Does control come to mind?  Do you think that now I can’t do what I want?  A budget or spending plan is a measure of control, but it doesn’t work against you, it works for you.

A spending plan or budget is defined as a plan for meeting expenses in a given period of time.  In other terms, an estimate of how money will be spent.

In summary, the purpose of a spending plan is to:

  1. Provide a forecast of revenues and expenditures or a model of how our finances might perform if certain strategies and plans are carried out.
  2. Enables your actual spending plan against the forecast or estimate of planned expenses.

If the actual figures delivered through the spending plan period come close to the estimate or forecast, it suggests that you have been successfully driving your finances in the intended direction.

On the other hand, if the figures diverge from the plan, this could mean that we are out of control. 

There are many different types of spending plans or budgets.

There are spending plans for startup businesses and budgets for corporations.  There are department spending plans and city, county, and state budgets.  There are even personal and family spending plans as well as vacation spending plans and monthly spending plans.  There are sales budgets and cash flow budgets.  There are even marketing and production spending plans.

So many spending plans and budgets…

Seems like if all of these spending plans and budgets exist and all different types of organizations and groups use them, there must be something about them that works.

A spending plan is a plan for spending money that is tied to an overall goal for the group or organization.  In an organizational context or business sense, all expenses are tied to the spending plan.

For example, in the retail business, you have a sales budget or what some call a sales estimate.  This could be daily, weekly, or monthly.  In this environment, you must meet the sales budget or estimate!

This is because everything, all expenses, is tied to the sales budget.

Salary costs and overhead, shipping, and even markdowns are all tied to the sales budget.  If the sales budget was not meant, then to have a positive cash flow, to stay in the green, to keep the budget at a break-even; something in the budget has to be cut – spending had to be cut.

More often than not it was salary cost, but something had to be cut.             

My point is that if organizations and groups use budgets in this way, why can’t you.

Why can’t you estimate your spending with a budget and then if you do not meet the budget cut some spending? 

That company that you bought your car from and the company that you bought your cell phone from doing it that way.  That is, they manage the finances with a spending plan or budget estimate, and then if they do not meet the estimate, they start cutting.

If you meet the estimate, if you spend according to plan, you are good- there is no cutting necessary.

Try it…a budget may benefit you and take you to a place of financial security you never imagined.  Share your spending plan strategy and subscribe to my blog and learn how to create and manage a winning spending plan for you and your family.

#GoldenRules #youneedaspendingplan #financial management #spending plan