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Financial Coach: Guiding Your Path to Financial Success

Managing personal finances can be daunting, especially when faced with complex financial decisions and the increasing economic challenges of changing economic conditions. Many individuals need help navigating the intricacies of creating a spending plan, saving, investing, and planning for the future. The need for a financial coach has become more apparent in such circumstances. A financial coach is a professional who provides personalized guidance and support to help individuals achieve their financial goals and build a strong foundation for a secure financial future.

Customized Financial Guidance

One of the primary reasons to seek the services of a financial coach is the personalized approach they offer. Each person’s financial situation is unique, with different income levels, expenses, and long-term goals. A financial coach thoroughly understands their client’s financial circumstances and tailors their advice and strategies accordingly. This level of customization ensures that individuals receive guidance that aligns with their specific needs and aspirations

Creating a Solid Financial Plan

A financial coach is crucial in helping clients create a well-structured financial plan. This plan encompasses a wide range of financial aspects, such as setting realistic goals, creating a spending plan, managing debt, saving for emergencies, and planning for retirement. With the support of a financial coach, individuals can develop a comprehensive roadmap that will serve as a guide to making sound financial decisions at each stage of life.

Encouragement and Accountability

One of the challenges many people face when it comes to managing finances is staying disciplined and committed to their financial goals. A financial coach serves as both a motivator and an accountability partner. They provide encouragement, keeping clients focused on their objectives and reminding them of the benefits of staying on track. This accountability factor can be a game-changer in helping individuals overcome financial hurdles and develop healthier financial habits.

Overcoming Financial Challenges

Life is full of unexpected events that can impact one’s financial stability. Whether it’s a sudden job loss, a medical emergency, or a significant economic downturn, a financial coach can help individuals navigate through difficult times. They offer support, reassurance, and alternative solutions to tackle financial challenges effectively. By having a coach by their side, individuals can gain the confidence to face financial uncertainties and make informed decisions during challenging situations.

Enhancing Financial Literacy

Financial literacy is a valuable skill that empowers individuals to make sound financial decisions. A financial coach educates clients about various financial concepts, investment options, and money management techniques. This knowledge equips individuals to handle their finances independently with the skills needed to navigate their financial journey with confidence and intelligence. In the long run, it helps them build a strong financial foundation for their future.

Building Healthy Financial Habits

A financial coach is an accountability partner who encourages you to stay disciplined and committed to your financial goals. They keep you on track, motivating you to follow through with your financial plan and maintain healthy spending and saving habits. Over time, these habits become second nature, leading to better financial outcomes, and reduced financial stress.

Eliminating Financial Stress

Financial stress is a common concern that can negatively impact overall well-being. A financial coach works with you to address financial worries head-on and develop strategies to reduce stress. By providing clarity and offering actionable steps, a financial coach can alleviate anxiety, promoting peace of mind and mental well-being.

Maximizing Financial Potential

A financial coach helps you identify opportunities for growth and makes recommendations that maximize your financial potential. Whether optimizing investments, minimizing taxes, or exploring new income streams, a coach can provide valuable insights that can significantly impact your long-term financial success.  

A financial coach can be a game-changer in your financial journey. With personalized guidance, support during challenges, the encouragement to build healthy financial habits, and enhanced financial literacy, a financial coach empowers you to achieve your financial goals and dreams. By investing in a financial coach, you are investing in yourself and your financial future. Remember, the benefits extend far beyond just money; they contribute to your overall well-being and peace of mind. So, take the first step on the path to financial freedom by partnering with a financial coach who can help you unlock your full financial potential.

Treat your money like no one else. Click the link and check out the latest money news, tips, and other blog posts at GoldenRules here.

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Manage Money Differently

One of the most well-known definitions of insanity is doing the same thing over and over again and expecting a different result. This statement applies to all aspects of life, but nowhere is it more relevant than in our personal finances. Many of us have financial habits or management practices that we stick to, sometimes blindly, without realizing that they may cause us to get the same undesirable results over and over again. We must manage money differently. Let’s examine why doing the same thing and expecting a different outcome is ridiculous, especially in our finances.

The Definition of Insanity

The famous quote, “Doing the same thing and expecting a different outcome is the definition of insanity,” is often attributed to Albert Einstein. However, there is no definitive evidence that he actually said this. Regardless of who said it, the statement holds true in many aspects of life, including our finances. If we continue to spend more than we earn, never save for the future, and take on more debt than we can handle, we will continue to experience the same negative financial consequences. You cannot expect to magically find ourselves in a better financial situation if we do not do the work and change our habits.

Why We Continue to Make the Same Financial Mistakes

One of the reasons why we continue to make the same financial mistakes is that we are creatures of habit. Once we get used to certain routines and patterns, and it can be challenging to break out of them. Additionally, we often make emotional decisions when it comes to our finances rather than logical ones. Perhaps you feel a sense of instant gratification when we buy something we want, even if we know we cannot afford it. You may also feel a sense of fear or anxiety when it comes to saving or investing, even though we know it is the right thing to do.

Another reason we make the same financial mistakes is that we often need more financial literacy and a complete understanding of the consequences of our actions. We may need to realize the impact that overspending or taking on too much debt can have on our long-term financial stability. We may need to fully understand the power of compound interest when it comes to saving and investing. With this understanding and financial literacy, we may avoid making the same mistakes, not realizing how they affect our financial well-being.

The Importance of Self-Reflection

To break out of our bad financial habits, we need to take the time to reflect on our behaviors and the impact they are having on our finances. Managing money is really about managing behavior. This can be a difficult and uncomfortable process, but it is necessary if we want to make positive changes. We need to ask ourselves tough questions, such as:

Why do I spend money on things I don’t need?

Why do I never seem to be able to save money?

Why do I take on more debt than I can handle?

By asking ourselves these questions, we can identify the underlying emotional or psychological factors driving our financial decisions. Once we understand these factors, we can develop strategies for managing and adjusting our behavior.

Breaking the Cycle

Breaking out of the cycle of bad financial habits requires a willingness and commitment to change and to make lasting changes. Below are some strategies to break the destructive habit cycle and improve your finances.

Create a Spending Plan

One of the most effective ways to break the cycle of bad financial habits is to create a spending plan. A spending plan helps us track our income and expenses, allowing us to see where our money is going and where we are overspending. By creating a spending plan, we can identify areas where we can cut back on expenses and redirect money toward financial goals, such as paying off debt or saving for the future.

Practice Delayed Gratification

Another important strategy for breaking the cycle of bad financial habits is to practice delayed gratification. This means waiting to purchase something we want until we can afford it and it fits into our spending plan. It requires a shift in mindset from instant gratification to long-term planning. One way to practice delayed gratification is to make a list of things we want to buy and prioritize them based on their importance. Then set a timeline for purchasing each item based on our budget and financial goals. I love this because you still get the thing you want, it’s just delayed for a while.

Educate Yourself

Improving your financial literacy and educating yourself about personal finance is another important strategy for breaking the cycle of bad financial habits. We can read books, attend workshops, or take online courses to learn more about saving, investing, and managing debt. With this new knowledge, we can make more informed decisions and avoid common financial pitfalls by increasing our financial literacy.

Seek Support

Breaking out of bad financial habits can be challenging, and it is crucial to seek support when needed. This can include working with a financial coach or counselor, joining a support group, or seeking the advice of friends or family members who have successfully improved their finances. By surrounding ourselves with a supportive community, we can stay motivated and accountable as we work towards our financial goals.

Track Your Progress

Tracking our progress as we work to break the cycle of bad financial habits is essential. This can be done by regularly reviewing our spending plan, tracking our savings and debt repayment progress, and celebrating our successes along the way. By monitoring our progress, we can see the tangible results of our efforts, celebrate, and stay motivated to continue making positive changes.

Doing the same thing and expecting a different outcome is ridiculous, especially regarding our finances. We must avoid making the same mistakes if we want our financial situation to improve. Take a hard look at our behaviors, identify the underlying emotional or psychological factors driving our decisions, and develop strategies for making lasting changes. By creating a spending plan, practicing delayed gratification, educating ourselves, seeking support, and tracking our progress, we can break the cycle of bad financial habits and achieve financial stability and security.

If you are searching for a financial counselor, The Association for Financial Counseling & Planning Education® (AFCPE®) is a great place to start. You can find an Accredited Financial Counselor® (AFC®) at the AFCPE website, https://www.afcpe.org/.

Treat your money like no one else. Click the link and check out other blog posts at GoldenRules here.

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Three Types of Financial Coaching

Financial coaching is a personalized, goal-oriented approach that helps individuals and families manage their finances and achieve their financial goals. Like financial counseling, there are several different forms of financial coaching, each serving a unique purpose and addressing different needs. Keep reading to discover what a financial coach does and three types of financial coaching.

What is a Financial Coach

A financial coach works with clients to understand their unique financial situation and helps them develop a customized plan for achieving their financial goals. Whether its reducing debt, increasing savings, planning for retirement, or something else, a financial coach can help.

Although financial coaches know many financial topics, the client is ultimately responsible for taking the necessary actions to achieve their financial goals. Additionally, financial coaching is an ongoing process that provides ongoing support and guidance. A financial coach will work with their client over an extended period of time, monitoring progress and providing feedback and support along the way. Providing support and guidance to clients helps them stay on track and adjust their financial plans over time. Further, financial coaching is solution-focused, meaning that the coach and client work together to find practical solutions to financial challenges and obstacles. The focus is finding solutions that work for the client rather than providing information or advice for three types of financial coaching, personal, business, and retirement financial coaching.

Personal Financial Coaching

Personal financial coaching focuses on helping individuals improve their financial situation and achieve their personal financial goals. The client’s financial goals could include developing a spending plan, reducing debt, increasing savings, and improving the credit situation and score. Personal financial coaches work one-on-one with clients to create a customized plan for financial success and provide ongoing support and guidance.

Business Financial Coaching

Business financial coaching helps small business owners and entrepreneurs manage their finances and achieve their business goals. Additionally, business financial coaching might include developing a spending and financial plan, improving cash flow, and reducing debt. Business financial coaches work with clients to build a comprehensive financial strategy supporting their business objectives and goals.

Retirement Financial Coaching

Retirement financial coaching focuses on helping individuals plan for their financial future. They also help clients ensure they have the resources they need to live comfortably in retirement. This may involve developing a retirement plan, creating a will or trust, and planning to transfer assets to the next generation. Retirement financial coaches work with their clients to develop a customized plan for retirement that meets their specific needs and goals. Financial coaches will give clients the information and education to make informed decisions about goals for retirement. 

Working With a Financial Coach

Each form of financial coaching has its own set of techniques, strategies, and best practices, and financial coaches are trained to apply these effectively to meet the needs of their clients. By working with a financial coach, individuals and families can better understand their financial situation, develop a customized plan for financial success, and take practical steps to improve their financial well-being. You can find a financial coach at the Association of Financial Counseling and Education (AFCPE) website; click here.

Financial coaching is valuable for anyone wanting to control their finances and achieve their financial goals. Whether you’re an individual, a small business owner, or planning for retirement, a financial coach can provide the guidance, support, and practical tools you need to achieve financial stability and success.

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Debt to Income Ratio

The debt-to-Income (DTI) ratio is a financial measurement used to evaluate an individual’s ability to repay their debts and is a crucial part of your overall financial health. It’s calculated by dividing the total monthly debt payments by the total monthly gross income. The result is expressed as a percentage. Why does this matter?

Why Your Debt-to-Income Ratio Matters

Keeping your DTI ratio at a moderate level signals that you’re a responsible manager of your debt, which can improve your credit score and eligibility for financial products. A general rule of thumb is to keep your overall debt-to-income ratio at or below 43%.

It shows how balanced your spending plan is and assesses your creditworthiness.

A ratio below 43% is seen as a wise target because it’s the maximum debt-to-income ratio at which you’re eligible for a Qualified Mortgage —a type of home loan designed to be stable and borrower-friendly. A DTI ratio of 43% or lower is generally considered ideal for most borrowers. The borrower’s debts, including mortgage payments, credit card payments, car loans, and other debt obligations, should be at most 43% of their monthly pre-tax income. If the DTI ratio is higher than 43%, it may indicate that the borrower is overextended and may have difficulty paying debt obligations.

Keep in mind that the DTI ratio is just one factor that lenders use to evaluate loan applications. Other factors, such as credit score, employment history, and assets, are also considered.

Less Favorability in your Spending Plan and Borrowing Terms

When a significant portion of your income goes towards paying debt, you have less left to save, invest, or spend on things you want and need. Additionally, if you have a high debt-to-income ratio, you will be seen as a riskier borrowing prospect. When lenders approve loans or credit for risky borrowers, they may assign higher interest rates, steeper penalties for missed or late payments, and stricter terms.

A debt-to-income ratio over 43% may prevent you from receiving a qualified mortgage, limiting you to approval for home loans that are more restrictive or expensive.

And although it Is used a lot in qualifying people for mortgages, it can be used to manage money and debt better. As interest rates increase, decreasing and lowering your debt burden becomes more critical.

Different Types of Debt-to-Income Ratios

There are two main types of DTI ratios – front-end ratio and back-end ratio. The Front-end DTI ratio calculates the income percentage used to pay housing expenses, such as mortgage or rent payments. The back-end DTI ratio considers all debt payments, including housing expenses, credit card debt, student loans, and car loans.

Importance of Debt-to-Income Ratio for Loan Approval

A low DTI ratio is a positive sign for lenders, as it may indicate that borrowers have the financial stability to repay their debts. A high DTI ratio can signal to lenders that borrowers may struggle to repay their debts and may be at a higher risk of defaulting on their loans. As a result, lenders may only accept loan applications or offer more favorable terms to borrowers with high DTI ratios.

How do you Calculate the Debt-to-Income Ratio
  1. Add up your monthly debt payments (rent/mortgage, student loans, auto loans, and monthly minimum credit card payments).
  2. Find your gross monthly income (your monthly income before taxes).
  3. Debt-to-income ratio = your monthly debt payments divided by your gross monthly income.

Here’s an example:

You pay $1,900 a monthly for your rent or mortgage, $500 for your car loan, $300 in student loans, and $400 in credit card payments—bringing your total monthly debt to $3100.

Your gross monthly income is $6,500.

Your debt-to-income ratio is 3,100/6,500, or 47%.

A Debt-to-Income Ratio of 36% or Less

A debt-to-income ratio of 36% is considered a good debt-to-income ratio. With a DTI ratio of 36% or less, you have a healthy monthly income to put towards investments or savings. Most lenders will see you as a safe bet to afford monthly payments for a new loan or line of credit.

DTI Ratio and Credit

Credit reporting agencies don’t collect consumers’ wage data, so a debt-to-income ratio won’t appear on your credit report. Credit reporting agencies are more interested in your debt than income history. Although your credit score isn’t directly impacted by your debt-to-income ratio, lenders or credit issuers will likely request your income when you submit an application. Just as your credit score will be one factor in their application review process, your debt-to-income ratio will also be considered. A high DTI ratio can hurt a person’s credit options as it can indicate that they are overextended and may struggle to repay their debts. A low DTI ratio can help improve credit options as it shows that a person is financially responsible and able to manage their debts.

Improving your DTI Ratio

If you have a high DTI ratio, you can take steps to improve it. This can include paying down debt, increasing income, or a combination of both. Reducing monthly debt payments by paying off credit card debt or negotiating lower interest rates can also help improve the DTI ratio.

By regularly monitoring your DTI ratio, you will identify areas where they can reduce debt or increase income to improve their financial stability.

The DTI ratio also provides you with a good snapshot of your current financial health. If it’s below 36%, you’re in a good position to take on new debt and pay it off with regularity. But when it’s over 50%, you should try to reduce the number of debt obligations (by either working to pay off credit cards, find a more affordable home, or refinancing your current loans) or find ways to generate more income. When your DTI falls between 35% and 50%, you’ll usually be eligible for some approvals. Even so, your financing terms on lines of credit will be better if you hit the premium level of sub-35% debt-to-income.

The DTI ratio is useful for individuals to assess their financial situation and determine if they are overburdened with debt. It’s also a valuable tool for lenders to evaluate the creditworthiness of loan applicants and determine the risk of loan default. Maintaining a low DTI ratio can help individuals improve their chances of being approved for a loan and ensure that they are in a better position to repay their debts, and ensure they are on a path to financial security.

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Three Types of Financial Counseling

When it comes to financial counseling, there are different approaches that a counselor can take depending on an individual’s financial situation and goals. Three common types of financial counseling are preventative, productive, and remedial. Each approach focuses on a different aspect of financial well-being and can provide valuable guidance and support. Let’s look closer at preventative, productive, and remedial counseling, three types of financial counseling.

Preventative Financial Counseling

As the name suggests, preventative financial counseling focuses on helping individuals establish good financial habits and behaviors before financial problems arise and to avoid future financial crises. This type of counseling may involve creating a spending plan, setting financial goals, developing a plan for saving and investing, and credit management. Preventative counseling can also help individuals avoid common financial pitfalls, such as overspending or taking on too much debt. Additionally, by establishing healthy financial habits early on, individuals can set themselves up for long-term success and build a solid foundation for their financial future.

Productive Financial Counseling

Productive financial counseling focuses on helping individuals optimize their financial situation and achieve their financial goals. This type of counseling may involve creating a plan to pay off debt, developing a retirement savings strategy, or creating a spending plan that maximizes income and reduces expenses. It could also include setting realistic and achievable goals, assessing financial resources, and developing strategies to maximize them. Productive counseling can also help individuals make informed financial decisions by providing guidance on investing, insurance, and other financial matters. Individuals can maximize their financial resources and achieve their financial goals by focusing on productivity and optimization.

Remedial Financial Counseling

As the name suggests, remedial financial counseling is designed to help individuals facing financial problems or crises such as high debt, job loss, or medical expenses. This type of counseling may involve creating a plan to manage debt, negotiating with creditors to reduce interest rates or payment plans, or helping individuals navigate financial emergencies. Remedial counseling can also support and guide individuals experiencing financial stress or anxiety. By providing solutions and strategies for managing financial problems, remedial counseling can help individuals regain control of their finances and move toward financial stability.

The type of financial counseling an individual needs will depend on their current financial situation, goals, and needs. Preventative, productive, and remedial financial counseling are all practical approaches that can help individuals achieve their financial goals and improve their financial well-being. Preventative counseling is a great way to establish good financial habits and avoid future financial problems. Productive counseling can help individuals optimize their financial situation and achieve their financial goals. And remedial counseling can provide solutions and strategies for managing financial crises and regaining control of finances.

What ever the counseling approach, it should be based on client goals and objectives. Additionally, individuals can achieve long-term financial success and security with the appropriate financial counseling. If you are searching for a financial counselor, The Association for Financial Counseling & Planning Education® (AFCPE®) is a great place to start. You can find an Accredited Financial Counselor® (AFC®) at the AFCPE web site, https://www.afcpe.org/.

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Financial Coaching Vs. Traditional Financial Advice

Financial coaching is a personalized, goal-oriented approach that differs from traditional financial advice or financial counseling in several key ways. Below are four ways financial coaching differs from financial advice; financial coaching vs. traditional financial advice.

Focus on the Client’s Financial Goals

First, financial coaching focuses on the client’s specific financial goals and aspirations rather than simply addressing immediate financial concerns or problems. This means that a financial coach will work with clients to understand their unique financial situation and help them develop a customized plan for achieving their financial goals, whether reducing debt, increasing savings, planning for retirement, or something else.

A Collaborative Process

Second, financial coaching is a collaborative process involving the client’s active participation. A financial coach will work with their client to identify areas for improvement, set goals, and develop strategies for achieving those goals. Still, the client is ultimately responsible for taking the necessary actions to achieve their financial goals.

On Going Process

Third, financial coaching is an ongoing process that provides ongoing support and guidance. A financial coach will work with their client over an extended period of time, monitoring progress and providing feedback and support along the way. This helps clients stay on track and helps make any necessary adjustments to their financial plans over time.

Practical Solutions

Finally, financial coaching is solution-focused, meaning the coach and client work together to find practical solutions to financial challenges and obstacles. The focus is on finding solutions that work for the client rather than simply providing information or advice.

Financial coaching is a valuable resource for anyone wanting to control their finances and achieve their financial goals. A financial coach can provide personalized support and guidance, help you develop a customized plan for financial success, and hold you accountable for taking the necessary actions to achieve your financial goals.

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Tips to Manage Your Debt

Managing debt can be challenging, but it is essential to personal finance. With the right approach and some discipline, you can reduce and eventually eliminate debt, helping you achieve financial stability and peace of mind. Below are some tips for manage your debt.

Create a Spending Plan

The first step in managing debt is understanding how much money you have coming in and going out. Create a spending plan that considers all your income sources and expenses, including your monthly debt payments. This will give you a clear picture of your financial situation and help you determine how much money you can realistically allocate to paying off debt.

Additionally, a spending plan will help you to cut your expenses and free up more money for debt repayment. This will mean cutting back on entertainment, dining out, or other discretionary spending or finding more cost-effective ways to meet your needs.

Prioritize Your Debts and Avoid Credit Cards

Once you have a spending plan, it’s time to prioritize your debts based on their interest rates, balances, and payment due dates. Focus on paying off high-interest debt first, as these debts will cost you more over time. Consider using the debt snowball or debt avalanche methods to help you stay motivated and make steady progress. And avoid using credit cards. Credit cards often have high-interest rates and can easily lead to more debt. Try to use cash or a debit card instead, and only use credit cards for emergencies or when you know, you can pay off the balance in full each month.

Pay More Than the Minimum and Pay on Time

Making only the minimum payment on your debts will keep you in debt for longer and cost you more in interest over time. Try to make extra payments whenever possible to pay down your debt faster and reduce the interest you pay.

Paying late can result in additional fees and interest charges, making it even more difficult to get out of debt. Set up automatic payments or reminders to help ensure that you make your debt payments on time each month. A calendar is a great tool to help you record when payments are due and keep you on track.

Consider Consolidating Debt and Negotiating Interest Rates

Debt consolidation may be a good option if you have multiple debts with high-interest rates. This involves taking out a new loan to pay off multiple debts, typically at a lower interest rate. Just be sure to compare the terms and interest rates of different debt consolidation options to find the best choice for your situation. And if you have a good payment history and a high credit score, you may be able to negotiate lower interest rates on your debts. Contact your lenders and see if they are willing to lower your interest rates or offer more favorable terms. The worst they could say is no.

Avoid New Debt and Boost Your Income

While you are working to pay off your existing debt, it makes sense to avoid taking on new debt. This may mean putting off large purchases, using cash instead of credit, or finding ways to save money on everyday expenses.

Additionally, increasing your income can help you pay off your debt faster. Look for ways to earn more money, such as taking on a side job, selling items you no longer need, or renting out a room in your home.

Seek Help and Stay Disciplined

If your debt is overwhelming, consider seeking professional help. There are organizations and agencies that offer debt counseling and financial management services, and they can help you develop a customized debt repayment plan that fits your situation and budget.

I am a financial coach and counselor and would love to work with you to manage your debt. Connect with me here

Paying off and managing debt takes time, discipline, and effort. It’s a process that may take time to see results, but well worth it in the long run. Stick to your plan, avoid slipping back into old habits, and stay focused. By following these tips, you will find the right approach to reduce your debt, improve your credit score, and achieve financial stability.

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Encouraging Words About Creating and Using a Spending Plan

There are a few encouraging words about creating and using a spending plan that could be said to encourage people to create and use a spending plan to manage their money. I could say things like…

“A spending plan will help you take control of your money and reach your financial goals.”

“Creating a spending plan is a simple and effective way to ensure that your money is working for you.”

“By setting a spending plan, you can see where your money is going, and make adjustments to better align your spending with your priorities and goals.”

“A spending plan will help you avoid impulse buying and overspending, allowing you to save more money for your future goals.”

I could also say…

“A spending plan allows you to make more informed decisions about your money, by giving you a clear picture of your income and expenses.”

“A spending plan allows you to adjust your spending in response to changes in your income or expenses, such as a raise or unexpected expenses”

“A spending plan can help you reduce your stress and anxiety around money, by providing you with a clear and actionable plan for managing your finances.”

“A spending plan is a tool that helps you to be proactive and proactive in managing your money, rather than reactive and managing the consequences of poor financial decisions.”

And after saying all of that, ultimately, it’s up to you. The key to encouraging people to create and use spending plans is to help them understand the benefits and how a spending plan will help you reach your financial goals.

Here are a Few Things to Consider

A spending plan is not a one-time event but an ongoing process. It’s essential to regularly review and adjust your spending plan as your income, expenses, situations, and circumstances change over time.

You must understand that a spending plan is not restrictive or limiting. It’s a tool that allows you to make conscious and informed decisions about how you want to use your money.

Involve your significant other or family members in creating a spending plan. Having the support and input of loved ones can make the process less daunting. It can also ensure everyone is on the same page regarding financial goals and priorities.

Remember that creating a spending plan takes time and effort, but the benefits are well worth it in the long run. It’s important to be patient and persistent in sticking to a spending plan, despite setbacks or challenges. Like riding a bike, if you fall, get back up and start riding again.

Seek additional support, such as working with a financial coach or counselor, if you need help creating or sticking to a spending plan. They can also provide resources and tools to help you create and use a spending plan. This can include spending plan worksheets, online spending plan tools, or financial software.

A spending plan is not only for people with financial difficulties. It’s for anyone who wants to manage their money more efficiently and reach their financial goals.

It’s essential to be realistic and honest when creating a spending plan. It’s important, to be honest about your income, expenses, and spending habits. And be realistic because with a realistic spending plan, you are more likely to succeed and stick to it.

Spending Plans are Important

Creating and using a spending plan greatly benefits managing your money and reaching your financial goals. Ultimately, it’s up to you to decide to create and use a spending plan. My goal is to communicate the importance of a spending plan. And a spending plan is the one thing that can help you manage money better: it’s that important.

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Rethinking Your Spending Plan

I am a huge proponent of spending plans because they help people manage money and expenses better. If you find that your spending plan is not working as well as you had hoped, there are a few things you can do to rethink your spending plan and find a better way.

An Improved Way

Yes, your spending plan numbers must work, but your life must work, also. Otherwise, you’ll feel like your spending plan is restrictive, making it harder to stick to. You want the spending plan to work for you and not feel like it’s restricting you from living your life. Below are some tips to help you rethink your spending plan.

Review Your Expenses

Evaluate your expenses and find where you can cut back. Identify any unnecessary expenses and see if there are any areas where you can reduce spending. Track your expenses to help you find spending plan categories you can decrease.

Set New Goals

Revisit your financial goals, spending, and saving, and make sure they are still realistic and achievable. Your situation may have changed, and there is now a need to change your goals. Setting new, specific goals can help you stay motivated and on track.

Make a New Plan

Based on your new goals and expenses, make a new spending plan. Be sure to include specific, actionable steps to help you reach your goals. You want to review and create a new spending plan whenever your situation or circumstance changes.

Track Your Progress

Keep track of your progress by regularly reviewing your spending plan and monitoring your expenses. Schedule time at least once a week to review your spending and how you are meeting goals and objectives. This will help you identify any areas where you need to adjust.

Be Flexible

Remember that life happens, and plans change, so be prepared to adjust your spending plan accordingly. A spending plan estimates how you will send your money over a given time frame, and estimates change. You should be ready to change or adjust your spending plan.

Seek Professional Advice if Needed

If you are still trying to make a realistic spending plan, consider seeking help from a financial coach, counselor, or spending plan expert. They can help you develop a plan that you can stick to and that works for you and your family.

You will know you’ve found the right strategy when you are excited about putting it into action. If you aren’t enthusiastic about a design, keep brainstorming until you’re thrilled with your new plan.

Rethinking Your Spending Plan

By adjusting your spending plan using the points above, you can rethink your spending plan and make the changes need to keep you on track to meet your financial goals. Creating a spending plan is a process, and changes and adjustments are part of the process. A spending plan should solve problems and avoid making new ones.

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14 Tips to Help you Manage Money

Managing your money can be challenging, but it’s crucial to help ensure a stable financial future. Effectively managing money also takes knowledge. Below are 14 tips to help you manage money.

Create a Spending Plan

The first step in managing your money is knowing how much you earn and spend. Creating a spending plan that works for you and tracks your income and expenses will help you to understand how much you are making and spending and thus manage money better.

Keep Track of Your Expenses

Keeping track of your expenses can help you see where your money is going and identify areas where you can cut back on unnecessary spending. Use a spending plan app or spreadsheet to track your spending or keep your receipts and simply write down your expenses in a notebook.

Pay Yourself First

Make sure to set aside a portion of your income for savings before you pay your variable expenses or bills that are not the same monthly, like the electricity bill, or make any other purchases. This can help you build an emergency fund and reach your long-term financial goals.

Reduce Your Debt Where You Can

High levels of debt can be a significant burden on your finances. Focus on paying off your debts as quickly as possible, starting with the ones with the highest interest rates. Once you get the one with the lowest interest rate paid off, attack the next lowest with a vengeance, and so on.

Live Below Your Means

It’s essential to live within your means and avoid overspending. A spending plan that works for you and sticking to it will allow you to save and invest for your future while enjoying the things you love and value.

Avoid Impulse and Quick Purchases

Getting caught up in the moment and making impulse purchases without due diligence is easy. Unplanned impulse purchases can add up quickly and undermine your spending plan and financial stability. Try to delay purchases for a few days or weeks to see if you still want or need the item later. Better yet, use your spending plan to plan your spending and the purchase.

Invest For Your Financial Future

Consider investing a portion of your income in a retirement account, such as a 401(k), IRA, or other investment options, such as stocks or mutual funds, to help build your wealth over time. If you need to learn more about investing, seek professional investment advice to develop an investment plan that works for you. 

Educate Yourself About Personal Finance

Personal finance is very personal. The more you know about personal finance, the better equipped you’ll be to make informed decisions about your money. Read books, articles, and online resources, and attend seminars and workshops to expand your personal finance knowledge. Click here https://goldenrules.biz/subscribe/ to register for weekly financial tips by email. Once you subscribe, look for another email to confirm your email address.

Seek Professional Financial Management Advice

If you’re having trouble managing your finances, consider seeking the advice of a financial counselor, coach, or advisor. They can help you develop a personalized plan for your financial needs and goals.

Automate Your Money Management

Consider setting up automatic payments for bills, savings, and investments. This can help you stay on track with your spending plan and reach your financial goals more easily.

Review Your Finances Regularly

Make a habit of periodically, weekly, or monthly reviewing your finances. Review your income, expenses, and investments to ensure you’re on track to reach your financial goals and dreams.

Avoid Lifestyle Inflation

As your income increases, it’s important to resist the temptation to increase your spending proportionately. Instead, try to save and invest the extra money or use it to pay off debt. Use your spending plan to plan for the increase in income.

Use Cash Instead Of Credit

Using cash for purchases instead of credit can help you stick to your spending plan and avoid overspending. When you use credit, it can be easier to lose track of how much you’re spending, leading to more debt and financial stress.

Shop Around For The Best Prices

Before making a big purchase, shop around to find the best price. This can help you save money and ensure you’re getting the best value for your money.

Incorporating these tips into your financial strategy can improve your financial stability and help you reach your financial goals more effectively. Managing money is an ongoing process, and persistence is essential. Remember that managing your money requires discipline and commitment, but the rewards are worth it.

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Common Mistakes When Creating a Spending Plan

Creating and using a spending plan is more about managing behavior than money. What the spending plan does is help you to reach your financial goals. Money is the tool a spending plan uses to achieve financial goals. Below are some common mistakes when creating a spending plan.

Starting to create a spending plan without clear goals.

Clear goals make it easier to prioritize spending and ensure you’re on track. A spending plan’s goal must be what you are spending or saving money for. Before you save for a house, you should know what the type of house in the neighborhood you want to live in will cost. If you are saving for retirement, you should understand what you need to have saved by the age you plan to retire to afford the lifestyle you want. When starting a business, you should know how much you will need to spend upfront. The goal should never be about dollars but the purpose and reason behind the dollars.

Creating a spending plan without first tracking spending.

Tracking spending allows you to know where your money is going. When you do not following how much money is spent can make it hard to stick to a spending plan. I believe that if you do not track your income and expenses, you are not successfully managing your money because you do not know where you are spending it; you do not know where it is going, and therefore you cannot – effectively manage it.Tracking your spending helps to make your money, and you’re spending more real. You will begin to see it come in and go out and see it as a tool to help you achieve your financial goals.

Forgetting about small expenses.

It’s easy to overlook small, recurring expenses that add up over time, like the donut shop or vending machine. Be more aware of transactions that are quickly forgotten. Some online transactions, transactions without a receipt, can be soon forgotten. Take special steps to remember these.

Get a receipt or find a way to track expenses, even the small ones. There are only so many places where you can spend money and not get a receipt. If they do not give you one, ask for one. Additionally, make it a habit of putting all your receipts or log of expenses where you can find them.

Creating a spending plan without having an emergency or contingency fund.  

Without an emergency fund, unexpected expenses can derail a spending plan. It may be the most significant difference between those who manage to stay afloat and those who are sinking into worse financial debt. Emergency savings of 3 to 6 months of expenses allows you to meet unexpected financial challenges. The emergency fund not only allows you to cover these expenses but also gives you the peace of mind that you are prepared for financial emergencies that will arise.

Not reviewing your spending plan periodically for needed adjustments.

The spending plan process is living and breathing, and your spending plan needs to be checked regularly to ensure it’s still doing what you want it to. As a financial coach and counselor, I encourage clients to pick a day, choose a time, and prepare a place to work on their money, and then consistently work on their money during the time and place they choose, creating a habit.

Changes in your family situation, such as a child, will significantly impact your spending plan, and It’s essential to adjust spending plans accordingly. Remember that your spending plan is an estimate of how you will spend your money, so as your situation and circumstances change, your spending plan should also change. Spend time working on your money and adjust your spending plan as circumstances change.

Building a spending plan without regular savings.

Your spending plan must include savings that connect back to your financial goals, such as retirement, emergency fund, or other long-term goals. Your spending plan should have two or three categories: fixed, variable, and possibly occasional expenses. Once you allocate money to your fixed expenses, your first variable expense should be savings. Your savings is a variable expense, so it could be more one month and less the next depending on other things going on in your life. 

What is your why? Determine why you are creating a spending plan as it will help you avoid the common mistakes when creating a spending plan. Often people will make a spending plan because they want to get out of debt, save for retirement, or manage money better, but a spending plan is about your current situation also. Your spending plan should also make sure the life you are living currently is fulfilling. Just don’t plan to purchase a house or plan for retirement, plan for the other aspects of your life as well.

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A Financial Counselor: A Valuable Resource for Individuals Having Financial Troubles

Financial troubles can be overwhelming and stressful for individuals and families. When faced with mounting debt, unexpected expenses, or a decrease in income, it can be difficult to know where to turn for help. A financial counselor can be a valuable resource for individuals having financial troubles.

A financial counselor is a professional trained to help individuals and families improve their financial well-being. They can provide education, support, and guidance on a wide range of financial topics, including debt management, spending plans, and saving. Here are some ways a financial counselor can help anyone struggling with financial difficulties.

Reviewing Finances

The first step in resolving financial troubles is to get a clear understanding of the situation. A financial counselor will review the individual’s finances, including income, expenses, and debts. This will help the counselor identify the root of the financial problems and develop a plan for resolving them.

Developing a Spending Plan

One of the most essential tools for managing finances is a spending plan. A financial counselor can help the individual develop a spending plan that is realistic and achievable. The counselor will work with the individual to identify areas where expenses can be reduced, set financial goals, and create a spending plan that works.

Managing Debt

Debt is a common source of financial stress. A financial counselor can help the individual create a plan to manage debt and pay it off over time. This could include creating a debt repayment plan, negotiating with creditors, or exploring debt consolidation options.

Improving Financial Literacy

Financial literacy is the foundation for making informed financial decisions. A financial counselor can provide education and guidance on a wide range of financial topics, including saving, investing, and managing debt. By improving financial literacy, individuals can make better decisions about their finances and avoid future financial troubles.

Navigating Financial Crises

Financial crises, such as job loss or a medical emergency, can significantly impact an individual’s finances. A financial counselor can help individuals navigate these crises by providing support, guidance, and resources. The counselor can also help the individual develop a plan for managing the costs associated with a financial crisis and getting back on track.

In conclusion, a financial counselor can be a valuable resource for anyone struggling with financial difficulties. A financial counselor can help individuals and families improve their financial well-being and achieve financial peace of mind by providing education, support, and guidance. Whether dealing with debt, improving financial literacy, or navigating a financial crisis, a financial counselor can provide the tools and resources needed to achieve financial stability.

I am a financial coach. Click here and connect with me for a free coaching session to see if you are ready for a financial coach.

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How a Financial Coach Can Help

Financial troubles can be a source of stress and anxiety for many individuals. It can be challenging to navigate the complexities of personal finance and find a path to financial stability. This is where a financial coach can be of great assistance. A financial coach is a professional who specializes in helping individuals and families improve their financial well-being. In this article, we will explore how a financial coach can help individuals who are facing financial difficulties.

Identifying The Root of The Problem

One of the primary benefits of working with a financial coach is that they can help identify the root of the financial troubles. This could be anything from excessive spending to a lack of understanding of personal finance to a decreased income. A financial coach will ask questions, review finances, and make recommendations to help get to the bottom of the problem.

Developing a Spending Plan

Once the root of the problem has been identified, a financial coach can help an individual develop a spending plan. This will involve identifying areas where expenses can be reduced, creating a spending plan, and setting realistic financial goals. A coach can also provide guidance on managing debt and tracking spending to ensure that the spending plan is followed.

Improving Financial Literacy

Financial troubles often result from a need for more financial literacy. A financial coach can help by educating the individual on financial concepts and strategies. This could include teaching the individual about savings, investing, debt management, and other financial topics. By improving financial literacy, individuals can make better decisions about their finances and avoid future financial troubles.

Staying Accountable

One of the biggest challenges of managing finances is staying accountable. A financial coach can help individuals stay on track by setting milestones and holding them responsible for their financial decisions. Setting and achieving financial goals, such as paying off debt, saving for a down payment on a house, or investing for retirement. Regular check-ins and progress updates will help ensure that the individual is making progress and staying on track toward their financial goals.

Dealing With Specific Financial Problems

A financial coach can also help individuals deal with specific financial problems. This could include dealing with a job loss, navigating the complexities of student loan debt, or managing the costs of a significant life event, such as a marriage or the birth of a child. A coach will work with the individual to develop a plan of action that addresses these specific financial problems.

Working with a financial coach can be a valuable investment for individuals facing financial difficulties. A coach can help an individual identify the root of the problem, develop a budget, improve financial literacy, stay accountable, and deal with specific financial issues. By working with a financial coach, individuals can better understand their finances, develop a plan for the future, and achieve financial peace of mind.

I am a financial coach. Click here and connect with me for a free coaching session to see if you are ready for a financial coach.

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Reaching Financial Goals in 2023

As we enter a new year, many have set financial goals for themselves. Whether saving for a down payment on a house, paying off debt, or building an emergency fund, reaching financial goals in 2023 requires planning and discipline.

A Combination of Using a Spending Plan, Saving, Reducing Debt, and Investing

One of the first steps to reaching your financial goals is to create a spending plan. A spending plan is a plan or estimate for how you will spend your money in a time period, such as a month or every two weeks. By tracking your income and expenses, you can identify areas where you can cut back and redirect that money toward your goals.

Next, pay yourself first and create a savings plan. After taking care of fixed expenses, decide how much you would like to save and set up automatic transfers to a savings account. This will help you consistently save money and make progress toward your goals.

Another key component to reaching your financial goals is to reduce your debt. High-interest debt, such as credit card debt, can be a significant obstacle to achieving your financial goals. Consider consolidating your debt or working with a financial coach or counselor to develop a plan to pay off debt.

In addition to creating and using a spending plan, saving, and reducing debt, consider investing for the future. Investing can help your money grow, but it’s essential to have a long-term perspective and to be comfortable with the risk involved. When investing, consider a diversified portfolio that can help you mitigate the risk and increase your chances of having a good return.

In addition to the tips above, there are a few other strategies that can help you in reaching your financial goals in 2023.

Increasing Income, an Emergency Fund, and Your Credit Score

One strategy is to focus on increasing your income. This could include asking for a raise at work, picking up a side hustle, or starting a small business. Increasing your income can put more money towards your financial goals each month.

Additionally, optimize your spending. This can include negotiating bills and looking for deals on everyday expenses. You can free up more money toward your goals by cutting back on unnecessary expenses.

It’s also important to have an emergency fund in place. An emergency fund is a savings account set aside for unexpected expenses. By having a sufficient emergency fund, you can avoid borrowing money or dipping into your long-term savings when unexpected expenses arise and delay financial goals.

You should also be aware of your credit score and take steps to improve it if necessary. A good credit score can help you qualify for lower interest rates on loans and credit cards, saving you money over time.

Consider Working with a Financial Coach to Reach Your Financial Goals in 2023

Finally, consider working with a financial counselor or coach. A financial counselor or coach can help you create a personalized plan for reaching your goals and can provide valuable guidance and support as you work to achieve them.

There are many strategies you can use to reach your financial goals in 2023. The key is to create a plan and stick to it, while being mindful of your spending, saving, and investing. Additionally, you may want to increase income, create and emergency fund, and improve your credit score which will save you money. Review your progress regularly, so you can adjust your plan as needed and stay on track. With discipline and persistence, you can achieve your financial goals and secure your financial future.

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Four Tips to Help Manage your Money in 2023

Managing your money can be difficult, but it is essential to achieving your financial goals in 2023. The beginning of the year is a great time to prepare and plan to manage your money better in 2023. Often, we need better planning with personal finances. And then we get frustrated and quit, all the while thinking that this budget stuff does not work. Read further for four tips to help you manage your money in 2023.

Develop Goals for Your Finances to Manage Money in 2023

First things first, goals point the way to first. Everything starts somewhere, and like laying bricks, if the first course is straight, we know the wall will be straight. If we start the right way, we can finish the right way. It would be best if you had goals for your finances. Develop S.M.A.R.T. goals (Specific, Measurable, Attainable/Actionable, and Realistic, with some Time frame) for your finances. If you make your goals SMART, you will be more adept at achieving them. Goals are like a mission statement in business. They tell you what you are going to do and how consistently. When you doubt or need direction regarding what to do with your finances, your goals will point the way.

Sit down and think about how you want your finances to look in 2023 and what you want to do with your money. Then write down some SMART financial goals for 2023.

Track Your Spending

One of the most important things in managing your finances is tracking where your money is going. You must know where and how much money you are spending to manage it effectively. Managing money is about behavior and tracking your money allows you to see behavior(s) that need to adjust.

I dare you to track your spending for a month. Write down and track every penny you spend and where you spend it. By tracking your expenses, you will see where you can spend less and identify areas where you can cut back and redirect that money toward your goals. You will see places where you can change your spending behavior with money.

Pay Off High-Interest Debt

High-interest debt, such as credit card debt, can be a significant obstacle to achieving your financial goals. Consider consolidating your debt or working with a financial counselor to develop a plan to pay it off. By reducing or eliminating high-interest debt, you can free up money to go toward your financial goals.

Plan your Spending to Manage Money in 2023

Now comes the fun part — spending your money and a spending plan or a plan to spend your money. One of the three things money is good for is spending. So, it’s okay to spend it, it’s yours, and you worked hard for it. My goal is to get you to plan to spend it.

Next, take all the information from tracking your spending and create your spending plan for the next month based on what you spent that month. For example, if you spent $400 at the grocery store last month, you would spend around $400 next month. At least you will be closer to the actual number than just picking a number out of the air. Remember, a spending plan is an estimate of how you will spend your money. The better you can make the estimate, the better the spending plan. Sticking to your spending plan and adjusting as necessary to stay on track is important.

Review your progress regularly and adjust your plan as needed. It would help if you also considered setting up automatic savings. This would allow you to save money consistently and make progress toward your goals.

Managing your money is not easy, but with financial goals, tracking your spending, paying off high-interest debt, and creating and using a spending plan, you can make the most of your money in 2023 and reach your financial goals. Remember to stay disciplined and persistent, and don’t be afraid to seek help when needed.

I wish you all a happy and prosperous 2023.  By setting goals for your finances, tracking your spending, and planning to spend your money, you can manage your money better in 2023.

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Benefits of Working with a Financial Coach or Counselor

Working with a financial coach or counselor can be a valuable resource for individuals looking to improve their financial well-being. Below are several reasons someone may benefit from working with a financial professional. I am a financial coach and counselor and would love to work with you. Connect with me, and let’s get going to saving you some money.

Lack of Financial Literacy

Many individuals have yet to be taught the basics of personal finance and may need a clearer understanding of how to manage their money. Working with a financial coach or counselor can educate individuals on spending plans, saving, investing, and many other financial concepts.

Difficulty Sticking to a Spending Plan

Creating a spending plan is one thing and sticking to it can be quite another. A financial coach or counselor can help individuals identify and overcome any obstacles preventing them from sticking to a spending plan.

A financial coach or counselor can help individuals create a spending plan that works for their specific situation. They can also help individuals identify areas where they may be overspending and provide strategies for reducing expenses. Additionally, a coach or counselor can help individuals create a plan for saving money and reaching their financial goals.

Debt Management

High debt levels can be overwhelming and make it difficult to save or invest for the future. A financial coach or counselor can help individuals create a plan to pay off debt and become debt-free. A financial coach or counselor can help individuals negotiate with creditors and make a payment schedule. They can also provide strategies for avoiding future debt, such as developing a spending plan, living within one’s means, and avoiding impulse spending.

Difficulty Saving for Future Goals

Many people need help saving for long-term goals such as retirement or buying a home. A financial coach or counselor can work with individuals to create a savings plan and provide strategies for achieving their financial goals.

A financial coach or counselor can help individuals create a savings plan which may include setting up automatic savings plans, creating a spending plan that provides for savings, and identifying ways to increase income. They can also help individuals understand the importance of saving for different types of goals, such as retirement or education.

Managing Financial Stress

Money is often a source of stress for people, and a financial coach or counselor can help individuals develop strategies for managing financial stress. This can include learning stress-management techniques, creating a spending plan, and developing strategies for achieving financial goals. They can also help individuals understand the importance of self-care and its impact on their overall well-being.

Overall, working with a financial coach or counselor can provide a personalized approach to managing finances and help understanding your financial situation. Additionally, develop a plan that works for you. They can also provide a sense of accountability and motivation, which allows individuals to stay on track to achieving their financial goals. Connect with me, and let’s get going to saving you money.

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Breaking Financial Shame

Have you felt embarrassed or guilty about your financial situation? You could be experiencing financial shame. A 2021 article in the Journal of Organisational Behaviour and Human Decision Processes describes how financial shame can lead people to avoid financial information, creating a vicious cycle that increases financial hardship. Below are some tips for breaking financial shame. 

What Exactly Is Financial Shame

Financial shame is a feeling of embarrassment or guilt related to one’s financial situation or behavior. It can stem from various factors, such as debt, lack of savings, or financial mistakes. It can also be internalized or come from societal or cultural pressures. Unfortunately, It can be a barrier to seeking help or making positive changes in your financial life.

Evidence Of Financial Shame

Financial shame can manifest in a variety of ways. For example, it may prevent someone from discussing their financial situation with others, even if they could benefit from help or advice. It can also cause someone to hide their financial struggles by refusing to open bills or bank statements. This can lead to avoiding seeking help, such as from a financial coach or counselor, and can lead to a downward spiral of financial problems.

Additionally, financial shame can result from societal or cultural pressure to have a certain level of wealth or financial stability. This can lead to feelings of inadequacy or failure, even if someone’s financial situation is not significantly different from that of others around or close to them.

Recognize Financial Shame for What It Is

It’s important to acknowledge that financial shame is usual, especially in a society that values wealth and success. But it is also important to understand that it can be overcome. Below are several tips to help you break financial shame.

Seek Help and Support

Don’t be afraid to contact a financial coach, counselor, or financial professional. They can provide the tools and information you need to improve your financial situation and help you overcome financial shame.

Educate Yourself About Personal Finance

The more you know about personal finance, the more you will feel in control of your financial situation. Read books, take classes, or find online resources to help you understand the basics of personal finance.

Set Financial Goals

Setting financial goals, such as paying off a credit card balance or saving a certain amount of money, can help you feel a sense of accomplishment and boost your confidence. Remember to craft your goals using the SMART acronym (Specific, Measurable, Actionable, Realistic, and have a Time Constraint). If you make your goals SMART, you will better goals and be able to achieve them. 

Practice Self-Compassion

Be kind and understanding to yourself and practice self-compassion. Remember that mistakes in general, and financial mistakes specifically, are a part of life, and everyone makes them. Don’t beat yourself up; remember that you can always learn from your mistakes and improve. Use your past mistakes as a learning opportunity and commit to improving your financial habits. Try to focus on what you can do to improve your situation rather than dwelling on past mistakes.

Surround Yourself with Supportive People

Surround yourself with people who will support and encourage you rather than judge or shame you for your financial situation. If friends and the people you currently associate with are not supportive, you may need to find some new people to connect with.

Steps to Breaking Financial Shame

Breaking the cycle of financial shame can be difficult, but there are several steps you can take to help. First, acknowledge your feelings and recognize that feeling ashamed about your financial situation is regular and that you are not alone. Next, be honest with yourself and take an honest look at your financial situation and identify the areas where you may have made mistakes. Thirdly, create a plan to address your financial situation, including steps to reduce debt, increase income, and create a budget. Finally, act and follow through with your plan and take action to improve your financial situation.

Breaking financial shame is not easy, but it is possible. By doing the things above, you can take control of your financial situation and overcome financial shame. Remember that financial mistakes are a part of life, and you are not alone in this journey.

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Your Holiday Spending Plan

First, I wish everyone a wonderful, stress-free holiday season. I pray this holiday season is free from money worry and brings you all the joy and peace you can handle.  

The holidays are a time to get together with friends and family and to celebrate. It can also be a stressful period when it comes to personal finances and managing money. It’s the most beautiful time of the year and can be the not-so-most lovely time of the year for your bank account.

Holiday retail sales are expected to increase 4 – 6% this year, and 2 in 3 (68%) of shoppers will spend more or the same on holiday shopping this year compared to last, according to a report from Klarna.

Below are a few tips to keep your holiday spending plan wonderful and on track.

You Need a Spending Plan

First, decide on a spending plan for your holiday expenses, including gifts and gift-related items, and stick to it. Also, include non-gift things in your spending plan, like entertainment, food and travel. If possible, use last year’s spending as a guide to create your spending plan for this year.

Make a list and Keep It with You

Make a list and set spending limits for holiday gifts for each person. A list will keep you on task and help you not get caught up in the season’s pageantry. Make sure to keep your list with you as you are shopping during the holiday season. Keeping your list on your cell phone is a great way to take your list with you whenever you are holiday shopping. 

It’s very easy to get caught up in the season’s emotions and buy more than you planned. A list can help go a long way in keeping your spending in check and preventing a sizeable after-the-holiday bill.

Be Aware of Credit Card Spending

Credit cards can make it easy to overspend. A large portion of a credit card company’s profits is generated by holiday spending and overspending.

An excellent method for holiday spending is the envelope system. In the envelope system, you develop a spending plan and then distribute your cash into different envelopes with the names of your gift recipients or spending categories on the envelopes. When the envelope is empty, there’s no more spending for that person or category.

Shop Smart

Shop around, whether online or in-person, because prices can vary drastically, and allow yourself time to compare prices and offers before Christmas comes. Think of personalized or homemade gifts that people will use and cherish. Remember that it is the thought that counts and be creative with your gift-giving. Certain browser extensions like Honey, Rakuten and Capital One Shopping will do the work for you if you are shopping online.

The holidays should be a time of celebrating with family and friends, but too often, the season is overshadowed by financial stress. With advanced preparation and setting realistic spending plan goals, the holiday season can be a cheerful time.

Wishing everyone a happy, joyous, peaceful, stress-free holiday season and a prosperous New Year!

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5 Tips to Reduce Debt

One of the first steps to managing your finances well is to know where you stand with debt. People use and go into debt for many reasons depending on our financial situation, life needs, and personal preferences. Debt can be classified into four main categories: secured, unsecured, revolving, or mortgaged. Below are 5 tips for reducing debt and paying debt off faster.

Create a Spending Plan Now

If you are using a spending plan already, great! If you are not using a spending plan, start using one today. To manage your finances well, you must know where your money is going, and a spending plan helps you to do that. Recording your transactions is a great habit and understanding your cash inflows and outflows is a great way to uncover new ways to save.

With some planning and managing, you can reduce the stress of borrowing and improve your financial health while reducing debt. Creating and using a spending plan will also help you live within your means and not have to use credit on everyday items like gas and groceries.  

Pay More Than the Minimum

Paying as little as $10 more than the minimum on your debt payment will help pay your debt faster and save you money in interest. For example, if you have a credit card with a $1,000 balance and an 18% interest rate and pay only the minimum monthly payment, it will take almost three years to pay off the balance. The total price would be about $1,304, meaning you are paying out $304 in interest alone.

On the other hand, using the same balance, interest rate, and minimum amount due, let’s say you pay more than the minimum due each month. If you were to pay an additional $60 each month, or a total of $100, it would take just 1 year to pay off the balance, and the interest paid would be reduced to $103, a significant saving.

It makes a big difference to pay more than just the minimum due, in both the time it takes to pay off debt and how much you end up paying. Of course, the optimum plan would be to pay the balance in full each month and avoid paying interest altogether, but the most important thing is to make sure your payments fit your spending plan. 

Make Biweekly Payments

Instead of paying your mortgage once a month, slice your payment down the middle and send half every two weeks. Why? There are 52 weeks a year, so this works out to 26 biweekly payments, meaning you would pay 13 total payments.

Biweekly mortgage payments don’t save you money by lowering your interest rate; they save you on interest by paying your mortgage earlier. When you pay your principal balance down faster, there’s less interest and less debt.

Choose One Debt and Pay it Off

Two approaches to this strategy are snowball or avalanche methods of debt reduction. In the avalanche method, you pick the debt with the highest Annual Percentage Rate (APR), attack it until it’s paid off, then move to the next highest APR. This will reduce the largest chunk of money you’re spending on interest.

With the debt snowball method, you focus efforts on the smallest balance. When your first debt has a zero balance, you take the amount you were paying towards that debt and use it to pay down the next debt on your list, paying off that debt quicker, and so on. Once you move all your debts to a zero balance, you can begin applying all your debt repayment spending plan items toward your savings to help you reach your long-term goals.

Use Savings to Pay Debt

If you owe more in interest on your debt than what you are earning in interest on your savings, you may want to use some savings to reduce your debt.

Paying down high-interest debt with savings may be a better use of your money. While it’s essential to build up your savings for many reasons, such as having money to pay for emergency expenses, there are times when that money may be more helpful in paying off debt. Paying off high-interest debt is one.

Reducing debt is always a good idea, and the 5 tips for reducing debt above can help pay off debt. Using a spending plan, paying more than the minimum, and paying off debts early, will save you interest. And with your debt paid off, you can put more of your money into saving and financial goals. Comment below; I would love to hear from you.

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What is Credit Utilization?

One of the least understood factors affecting your credit score is credit utilization. It’s an important factor making up 30% of the credit score. So, what is credit utilization?

While credit utilization may sound confusing, it’s relatively easy to understand. It’s the percentage of the debt you carry based on your credit limits. If your credit balance is high or close to the limit, it will lead lenders to believe that too much of your monthly income is going toward debt payments.

Debt-to-Credit Utilization Ratio

It’s often expressed as a ratio called the debt-to-credit utilization ratio. The ratio measures your credit usage against your available credit. Also known as revolving credit, it’s your credit card usage and how much of your open credit lines you are using.

Your credit utilization ratio is the sum of all your credit card balances divided by the sum of your card limits. For example, if your card balance is $400 and your total available credit is $1,000, you have a 40% credit utilization ratio.

There is no perfect utilization percentage, but the lower the ratio, the better. A ratio of 20% is better than 30%. Paying your card bills in full each month is the best way to keep a low credit utilization ratio.

Generally, a credit utilization ratio of 30% or less is acceptable. Improving this part of your credit score can require some strategic thinking. But, again, at 30% of the credit score calculation, well worth the effort.

Controlling your Credit Utilization Ratio

One way to lower your usage ratio is to increase your credit limit. For example, if your balance on a credit card is $400 on a credit card with a $1,000 limit, your ratio is 40 percent. However, a credit limit of $1500 with a balance of $400 makes the ratio 26.7 percent, which is much better. The lower your card balance, the lower your ratio—and the higher your credit rating.

Keep in mind that, since all your cards are factored into your credit utilization ratio, even the ones you don’t use can help your ratio and score. Additionally, if you pay off a credit card, keep that account open, so the available credit line raises the ratio in your favor. Further, asking for credit limit increases can better your usage percentage.

Why Does Credit Utilization Matter?

Why is this important? Generally, the lower the amount of outstanding debt, the higher the credit score, and vice versa. Remember, credit utilization is 30% of your credit score. If your credit burden is high, lenders will think that much of your monthly income is going toward debt repayments. Consumers who constantly reach or exceed their credit limit are seen as potentially risky.

Credit reporting agencies pay attention to your credit utilization ratio because it indicates how well you have your payments in order. A low utilization ratio suggests that your balance is manageable. A high one means you may have difficulty paying your debts.

Final Thoughts on Credit Usage

An open account with a zero balance can positively affect your credit utilization ratio. There can also be a negative effect on your credit score if you close an account.

So, the bottom line is to keep an eye on your credit utilization ratio. A low one is good for your credit score, and a high one is not so much. Comment below. I would love to hear from you.

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A Word or Two On Giving

a man giving cooked meal at home

As we get closer and closer to the holiday season, giving season, I want to give a word or two on giving. I give; you give; we all give. We give of our time, our talents, and our money. We give gifts for birthdays, during the holidays, and at weddings. Our tithes are given, and we give to the annual United Way campaign and even the PTA. With all this giving, do we really give the way we should, and more importantly, do we think about giving like we should?

Giving is Good

When I teach spending plan classes, one of the things I do is ask the class what the three things that money is good for?. I have categorized all we do with money into three categories and have written about them here. I ask this question to help them to see and think differently about spending and planning to spend their money. It’s good to spend money; I just believe in planning to spend money. The same with giving – giving is good.

I get some interesting answers from the class. Sometimes someone will blurt out, “money is good for earning, or it’s good for wasting, or we make money; money is good for making, right?” 

I really get a kick out of the initial responses. 

Eventually, after we get over the initial answers, someone will say spending or a category of spending like gas, shopping, or groceries. Then, someone says saving or investing, which takes care of the second category, saving/investing. And then, however, we get stuck. We cannot think of that other category, that other thing we have all done with money – giving. At this point, I continue with the class and tell them we will come back to the third thing later. Usually, I tell them but rarely does anyone guess the answer correctly.  It’s good to give. 

According to Dictionary.com, giving is the act of presenting voluntarily and without expecting compensation; to bestow. Also, to devote or contribute generously of: to give of oneself; to give of one’s abundance and, to make a gift or gifts; to contribute. 

Giving is Biblical

Giving is also biblical. In 2 Corinthians chapter 8 verses 13-14, Paul writes to the church in Corinth:

 13 Of course, I don’t mean your giving should make life easy for others and hard for yourselves. I only mean that there should be some equality. 14 Right now you have plenty and can help those who are in need. Later, they will have plenty and can share with you when you need it. In this way, things will be equal.

Giving is about equity. It’s about being a good steward of what you have been given.

Giving is something that we are prompted and not pressured to do. We are often pressured to give during your local United Way campaign or to another cause. In our current economic environment, there is a great need for giving, and many asking for gifts. 

Accordingly, when giving and deciding who and what to give to, give on purpose and give to vision.  

Give on Purpose

When we give on purpose, we give an established amount for an intended desired result. Giving on purpose is not haphazard but done with a goal in mind. What it is not is giving because of pressure or because of how you feel. You are giving an amount, whether time or money, that you believe will have the intended result. Ask yourself what the cause is. What is the organization doing? Can they do more and then contribute to the cause on purpose.

Give to Vision

When we give to vision, we give to something or someone that is going somewhere. They see a positive that others have not yet seen, the wildest dreams. We are inspired by vision, inspired by these dreams. When vision is visualized, it makes you happy to think about it and see it becoming a reality.

You can give to whatever you like.  It is your gift and I encourage you to give.  However, giving on purpose and giving to vision allows your gift to be maximized. You are being a good steward of what has been given to you when you give in this way.  And it will help you to systematically give and be confident giving more.  Thinking about giving in a different way, you will give like no one else. Comment below, I would love to hear from you.

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Point Of Sale Installment Loans: What’s the Deal with Buy Now, Pay Later, and Your Money

You make a purchase at your favorite retailer, maybe online, and opt for the buy now pay later option at checkout. Do you know what you just did? Also known as point-of-sale installment loans, many have grown fond of “buy now, pay later” services. 

If approved, which takes seconds, you make a down payment of the overall purchase amount. Then you pay the remaining due in a series of interest-free installments. You can make payments via check, bank transfer, debit card, or credit card automatically.

Increased Popularity of Buy Now, Pay Later

Point-of-sale loans gained popularity by positioning as a trendier credit-card alternative for millennials with few strings attached. The loose credit rules helped attract users. Buy now, pay later loans have increased from $2B in 2019 to $24B last year. They gained traction, with consumers seeking the flexibility of paying for goods and services over time but maybe untrusting of other credit and loan products.

According to a 2021 study by the Strawhecker Group, 39% of Americans say they’ve tried buy now, pay later at least once. 

The quick growth of buy now, pay later is driven primarily by younger consumers, with two-thirds of borrowers considered subprime. Nearly half of generation Z shoppers and 70% of millennials are more likely to make a purchase if they can buy now, pay later. The thinking behind buy now, pay later is consumers can get the things they want and need immediately while also getting extra time to pay for them.

Buy now, pay later can be an appealing way to pay for smaller purchases when shopping online. Its popularity grew during the rise of e-commerce in general.

What’s the Deal with Buy Now Pay Later?

Point of sale or buy now, pay loans are essentially an interest-free loan that gives consumers the flexibility to pay for goods and services over time. Often buy now, pay later does not charge fees, but they have a fixed payment schedule comparable to any similar type of unsecured personal or consumer loan. A point-of-sale loan will allow you to sport that $400 Kate Spade handbag and pay for it later in monthly installments. Buy now, pay later encourages consumers to purchase and borrow more. As a result, borrowers can quickly end up taking out several loans within a short timeframe at multiple lenders. 

Point-of-sale loans are not new. Banks have been offering them subtly at furniture stores and orthodontists’ offices for years. However, this type of lending has become increasingly popular in recent years as technology has improved.

Your Credit and Point of Sale Loans

As buy now, pay later has become more popular, users have become more prone to overspending and missing payments. Although consumers are choosing buy now, pay later loans as a competitive alternative to high-interest credit products, it does not help you establish and build good credit, and you miss out on any perks.

Buy now, pay later financing offered through credit card companies may carry lower fees or interest rates than the regular variable APR charged on outstanding balances. Typically, buy now, pay later doesn’t affect your credit score; however, late payments or failing to pay can damage your credit score. Some buy now pay later companies only require a soft credit check for approval, which doesn’t affect your credit score. Others may conduct a hard inquiry of your credit, knocking a few points off your score.

Point-of-sale loans are different than a purchase with a credit card because when you use a credit card you are only required to make the minimum payment due on the card each month. Interest accrues on the remaining amount until you pay it off unless your card has a 0 introductory APR.

Point of Sale Regulation

The Consumer Financial Protection Bureau CFPB), Last week CFPB outlined plans to regulate the buy now, pay later business. Regulators believe that buy now, pay later poses risks to consumers because they lack protections. They also and encourage over-borrowing and loan stacking or getting approval for multiple loans or lines of credit simultaneously within a short period. Loan stacking generally happens online and can be done by either individuals or businesses.

Regulators plan to regulate buy now, pay later like credit card companies. That means the buy now, pay later industry may have to add pricey safeguards and do more credit checks.

Be More Aware of Buy Now, Pay Later

There are some things that I want you to be aware of with buy now, pay later.

First, be aware of the repayment terms. Some loans may require you to pay the remaining balance with biweekly payments. And others may give you three or six months or longer to pay. Knowing how your payments will help you when creating your spending plan. Also, this will ensure that you can afford your payments and make them on time. A missing or late payment could result in late fees and be reported to the credit bureaus, which could hurt your credit score.

Inflation is causing people to increasingly struggle to pay for necessities up front and fail to repay their loans. During the pandemic, shoppers used buy now, pay later to buy luxuries. Now, 15% of buy now, pay later users are using buy now, pay later to pay for gas and groceries.

Also, remember that though you may be approved for a 0-interest point-of-sale loan, it’s not guaranteed. Point-of-sale loan companies can charge interest on purchases that can easily match or outpace what you might spend on a credit card. And unlike credit cards, you are not earning any rewards on purchases.

Finally, consider return policies and point-pf-sale loans may affect your ability to return something you purchased. The merchant may allow you to make the return, but you may not be able to cancel the point-of-sale arrangement until you provide proof that the return has been accepted and processed. 

There you have it, the ins and outs of point-of-sale loans. Be sure to weigh the advantages of point-of-sale installment loans against the benefits of using other financing options. And remember cash still works. What has been your experience with buy now, pay later or pint-of-sale loans? Comment below, I would love to hear from you.  

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Secured and Unsecured Debt

What is the difference, if any, between secured and unsecured debt? Both are debt, and isn’t debt, debt? What makes unsecured debt different than secured debt? Well, let us take a look and see.

What is Unsecured Debt

Unsecured debt is a finance term that refers to any debt obligation that is not collateralized. Collateral is something of value you own or an asset you put up to secure a loan or debt obligation. With unsecured debts, there is no tangible property or other product attached to that debt.

In the case of unsecured debt, a lender loans money without the security that an underlying asset provides. 

With unsecured debts, lenders don’t have the right to any collateral for the debt. If you fall behind on your payments, they don’t have the right to take any of your assets. However, the lender may take other actions to get you to pay. For example, they will hire a debt collector to collect the debt. If that doesn’t work, the lender may sue you and ask the court to garnish your wages or take an asset. The lender can also put a lien on another of your assets until you’ve paid your debt.

Examples of Unsecured Debt

Typical unsecured debts include credit cards, medical bills, student loans, and store credit cards where you do not have to put up any material as security for the debt.   

Also called signature loans or personal loans, borrowers often use unsecured debt for purchases such as computers, home improvements, or unexpected expenses. 

An unsecured loan means the lender relies on your promise to pay it back and nothing more. For this reason, unsecured debt carries more risk for the lender, making the loan more expensive. The more additional risk a lender must take on, the higher the rate of interest a borrower must pay, making unsecured loans subject to higher interest rates. Additionally, you have set payments over an agreed period, and penalties may apply if you want to repay the loan early. 

What is Secured Debt

In contrast to secured debt, if the creditor can take an item of property away from you to cover the debt, you are working with a secured debt. The creditor will sell the asset if the lender must take your asset because the account becomes delinquent. If the selling price for the asset doesn’t completely cover the debt, the lender may pursue you for the difference.

The fundamental difference between secured and unsecured debts is that tangible items are attached to the debt. Debts such as mortgages and car payments usually have tangible items attached to them, i.e., your house or car. Secured debts are tied to an asset and considered collateral for the debt. Lenders place a lien on the asset, giving them the right to take the asset if you fall behind on your payments. So, for example, your mortgage loan is secured by your home, and auto loan by your vehicle.

In a secured debt situation, as the borrower or person seeking the loan, if you were to file bankruptcy, failed to pay the debt obligation, or failed to meet the terms for repayment, the asset that secured the loan that you put up to cover the loan, would cover the debt.

Debt and Bankruptcy

The big difference between the two types of debts happens or is applicable when someone files for bankruptcy. In Chapter 7 Bankruptcy, you can choose to keep the product or property and pay off the debt in some way. But if it is decided that you cannot pay at all, you also have the option of giving the product or property back and paying off your debt that way. On the other hand, in Chapter 13 Bankruptcy, you are allowed to keep the merchandise or property, but you will be allowed to pay off your debt according to the Chapter 13 plan.

There you have it—the difference between unsecured and secured debt. There is a difference, and it can be a big one. Know what you are getting when you take on debt. Is it secured or unsecured? Comment below. I would love to hear from you.

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Pick a Day, Choose a Time and Prepare a Place

Managing money obligations, spending, and financial decisions take time. It’s kind of like a second or third job. You could call it bookkeeping; I call it – working on your money. I tell clients that if they don’t work on their money, someone else will, and later they will wonder where their money went and what happened to it. I tell them to pick a day, choose a time, and prepare a place, keep reading.

Below are some tips to help you when working on your money. I believe that we all do some type of bookkeeping currently but maybe not in this manner. I hope that the tips will help you consistently work on your money.  

Pick A Day of the Week to Work on Your Money

First things first, pick a day of the week when you will work on your money. It could be Sunday or Saturday morning unless you have young kids because they are probably waking you up. It could be Monday or Thursday. Whatever is good and convenient for you, pick a day and stick to it. This is the day that you will be working on your money.

And although the day should be convenient for you, if it stops being convenient after a while and stops working for you for whatever reason, change it. One of the things that I know about working on your money is that you set the parameters. It’s your day, and it’s your money.

Working your money is all about you.

Say the same day.

Choose a Convenient Time to Work on Your Money

After you pick a day, it’s time to choose a time. Again, this time should be convenient for you. Be specific with your time, 8am until 9am. And if you are not a morning person, don’t pick mornings. Whatever time you decide, this is the time that you will work on your money, planning your spending, paying bills, and reviewing financial goals.  

Say the same time. 

Prepare a Place to Consistently Work on Your Money

Picking a day and choosing a time is probably the easy part but preparing a place is where it starts to get somewhat tricky. Now it’s time to prepare a place to work on your money. The site should be comfortable with few distractions.

For example, I love music, and if I had music playing while trying to focus on something, I would not be able to because I would be distracted a lot.

Anyway, you will need a table or desk to spread out and work on your money. You also need to prepare the place with everything you need to work on your money; pen, pencil, marker, paper, spreadsheet, calendar, computer, and anything else you need. 

You should have and keep everything you need at the place so you can consistently sit down on the appointed day and time and be undistracted, plan your spending, pay bills and work on your money.

This will help you develop a regular schedule for working on your money; you must stick to it and be consistent. Consistency in your money management practices is one of the GoldenRules. Another is pick, choose, prepare. Getting started will be time-consuming, but it will become easier once it’s set up to meet your needs and you get into the habit of working on your money. If you did nothing in the beginning but just sit there on the picked day and chosen time and at the place you prepared, sit there anyway. Even if just for 5 minutes and once you consistently do this for a while, it will become a good habit and easier.

Say, the same place.

After you Pick a Day, Choose a Time, and Prepare a Place

After picking a day, choosing a time, and preparing a place, you are ready to start working on your money. You track spending, pay bills, and record expenses when working on your money. You are also reconciling your spending plan with your actual spending, determining what went wrong, planning for major purchases, saving, investing, and more. All the fun stuff it takes to manage money well and what I believe we all should do more of.    

Now say, the same day, time, and place.

Managing money obligations, spending, and financial decisions take time. Work on your money on the day you pick, at the time you choose, and at the place that you prepare, same day, same time, and same place. Sit down, plan your spending, pay bills, manage money, and reach financial goals. Get into the habit. Doing this will help you manage your money. Picking a day, choosing a time, and preparing a place seem like simple things, but they can help you get into the habit of working your money. And you know what they say, habit is what keeps you going. What keeps you going? Comment below. I would love to hear from you. 

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Tips to Organize Your Financial Life

For someone with a history and pattern of financial chaos, the first step toward better money management could be to just organize your financial life. Organizing your financial life requires a clear picture of where you are and where you want to go with your money. I believe you must know where your money is going, and where it’s being spent, to manage it effectively. Knowing where your money is going is one of my GoldenRules of financial management. Additionally, you must know where you are in terms of income, and debt. You will also need some SMART financial goals to lead the way to a better financial future. To help you accomplish this task, set up a system to track your expenses, income, and pay bills. 

Getting organized can be overwhelming and can stop the best of us even before we start. To help you get organized, use the organization tips below.

Tip #1. Get Organized by Setting Up a Tracking System

Set up a system to track expenses appropriately for your needs. The system could be as simple as a piece of paper and pencil or a spreadsheet on your personal computer. Before you do anything with your money, you must know where you are spending it and where it’s going. Again, this is a GoldenRule to managing money better.

In this case, knowing is more than half of the battle. I believe knowing allows you to see your spending and adjust it to help you meet your financial goals and not overspend. It’s a must for managing money effectively. You must know where your money is going before you can manage it effectively. 

Tip #2. Track Your Spending

If you have not already done so, start documenting your spending. Use that paper and pencil or spreadsheet and document, document, document. Once a week or even every day. Once a week will be less time-consuming, but from experience, it’s easy to forget some days, and daily, at least when starting, maybe the better way. However, tracking your spending will get easier the more you do it because you are creating a good habit.

Tip #3. Set Up a Consistent Place to Work Your Money

Whatever way you decide to track spending, you need a place to do that. Therefore, set a place where you will weekly or daily record your expenses, pay bills, and compare financial goals to reality. I call this “working your money”. Working your money is one of my GoldenRules to manage money better.

I believe in working your money. Please know that working your money takes time, it’s a job. However, you must work your money because if you don’t, someone else will, and you will be wondering where your money went and how you spent it on that.

Also, when working your money, compare your spending plan with your actual expenses. Comparing will help you stay focused on your system and organize your financial life. And be consistent. Pick a day and time to work your money, Sunday after church, Monday after work, Saturday morning, unless you have kids because they will be up before you. 

Tip #4. Don’t Make Your System Too Complicated (KISS)

In setting up your system, it is helpful to be as thorough as necessary for your needs but not too complicated to where you get bogged down, bored, and do not continue with it. The key is to have a system that is not intimidating to you. One of the goals of the process, besides organizing your financial life, should be to help you learn to manage your finances. As a money nerd, it’s hard to keep it simple sometimes, but try to use the KISS principle, for Keep It Simple Sweetie.

Tip #5. Organize Your Financial Life by Using a Spending Plan

If you are an over spender and cannot stick to your spending plan, perhaps setting up two bank accounts can help. Set up one account that you would use to pay bills and another discretionary account for discretionary expenses. The amount is based on your spending plan and used for discretionary expenses only. Using a spending plan is another GoldenRule.

Be aware that setting up a system that works well for you may take some trial and error. It is important to be patient and to make a commitment to working your money. Sometimes a perceived problem in the plan could be reluctance on your part and turn into a great opportunity. 

Final Thoughts on Organizing Your Financial Life

There are huge benefits to organizing your financial life. Ultimately organizing your financial life will help you make better financial decisions. Additionally, I believe that organizing helps you to be a better steward of your money. Additionally, the plan can help you develop a healthy relationship with money. You will start to see money as a tool to help you achieve financial goals. How do you organize your financial life? Comment below, I would love to hear form you..

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What is Wealth?

What is wealth? Most people will tell you that they want to be wealthy, but what exactly is wealth, and what does it mean to be wealthy? Why do people want to be wealthy? Why are they not wealthy? Isn’t cash king? Maybe they are wealthy and do not know it. Does anybody know?

If you want to be wealthy and create wealth, it helps to understand what it is and what it’s not. Wealth is as old as human history. Wealth is all the stuff we want, and, I believe, you can have wealth without having a lot of money.

What Exactly is Wealth 

The word wealth is derived from the old English word wela, which is from an Indo-European word stem. Some define wealth as the abundance of valuable resources. However, the meaning of wealth is context-dependent, and there is no universally agreed-upon definition.

Generally, economists define wealth as anything of value. Therefore, if an individual, community, region, or country possesses a large number of valuable resources, they are perceived as wealthy. Some see wealth as the net worth, the most common measure of wealth, of a person, household, or nation. Net worth is determined by subtracting liabilities, what you owe from assets., what you own of value.

The Wealth of Nations

In the book, The Wealth of Nations, by Adam Smith, he described wealth as “the annual produce of the land and labor of the society”.In this context, produce is that which satisfies needs and wants. He saw wealth creation as the combination of materials, labor, land, and technology in such a way as to capture a profit. 

Another definition of wealth is controlling or possessing an abundance of items of economic value. A wealthy individual, family, or nation has accumulated substantially more than their peers and others in their society or group of reference. Measurable wealth typically excludes intangible assets such as human and social capital. The opposite of wealth is destitution.

Wealth Vs. Money

I believe wealth is what we should seek and aspire to, and not necessarily money. Consider this, if wealth is so important and everyone wants to be wealthy, why does money get so much more attention? Do we want money or wealth? Money and wealth are not the same things. Having a supportive and loving family and great friends in abundance is considered wealth by some people.  

Wealth is a mindset. Perhaps you are more wealthy than you believe you are.

Wealth is not new. Historically, the sheep owner that owned more sheep was considered wealthier than the one with fewer. It is money that is a comparatively recent invention.

Some think that businesses make money, and some think they create wealth. They create wealth by doing, making, or supplying what people want. Still, want to be wealthy? Perhaps you are wealthier than you think. What are your thoughts on wealth?

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Setting Boundaries for Money and Your Spending Plan

One of the hardest things to do is to stick to a spending plan. There are a lot of unknowns when developing a spending plan, and unexpected expenses like car repairs and medical illnesses happen all the time. Have you thought about setting boundaries for your money?

Often it is our experience with and around money that affects how we handle money and our relationship with it. How you see money affects your relationship with it and understanding this could be a key to managing it better. We all have a relationship with money. Your relationship with money probably started when you were young. How did your parents handle money? Where arguments about money common? 

Learn from your experiences and use them to manage money and your spending plan. One way to improve your relationship with money is to set boundaries. Below are several tips to help you set boundaries for your money. 

Time Limits

Set a time limit rule about spending money. The rule would say you will not buy anything over a specific amount, $200 unless you think about it for 24-48 hours. During this time, you are asking yourself why you need to buy this item and how to pay for it. This rule will make you think about spending, something many of us do not do. 

Use Friends and Family as a Boundary

Set a specific dollar limit above which you will discuss non-essential purchases with friends or family. Sometimes spending money is all about emotions and getting buy-in from friends and family will sometimes take emotions out of the picture, and the focus can be on the want or need.  

Set a Pay-in-Full Rule

Another way to stay inside the boundaries of your spending plan is to set a pay-in-full rule. Map or plan out when and how you will pay off the item in full. The rule could state that if you cannot pay for an item in full by a certain time frame, which could be today, next week, or next month, you do not buy it. 

The Layaway Option

Consider layaway as an option to stay within your budget or spending plan. After you determine that you truly need an item but just cannot afford to pay for it in full today, think about buying it on layaway. Many companies have brought back layaway. It is a good option for some who need it right now but cannot afford it right now.

Use Cash as a Boundary

Use cash to make purchases. Cash still works most places. Studies have shown that when you use cash to make purchases, you spend less. It seems that the cash leaving your purse, pocket, hand, and wallet, hurts more than the plastic stuff.

Incorporating one or two of these doable tips will help you stay within the boundaries of your spending plan. They will also help you manage your money better by helping you understand your relationship with money. Use what works best for you. Your relationship with money is different than your neighbor’s.

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Why You Need a Financial Coach

Financial coaching

I was listening to a podcast, and the topic was teaching financial literacy in high school. According to the podcast, currently, 21 states now have personal finance coursework requirements in their high schools. Overall, 45 states require some form of finance instruction in their K-12 standards.

The podcast was interesting to me as I think I took a course in high school, but I really do not remember it….that was a long time ago. Studies have shown that though financial education in schools is important, it doesn’t always predict financial literacy among adults. For example, even though I took a course, I did not know what a mortgage was until I had one. I have been very blessed to make financial mistakes and still able to overcome them. I have made a lot of financial mistakes.

As I listened to the podcast, I thought of all the people who, like me, had to learn the hard way to manage money. Through mistakes and experience, some learned, and some did not. And this drives me to educate others about finances and coach and counsel people to make better financial decisions.

Why a Financial Coach

Financial coaches work with you over time and help you create short and long-term financial goals. They meet with you regularly and give suggestions and exercises to help you explore your values and meet your financial goals. Coaches also discuss ways to stay on track and ask how developed plans and strategies are working.

Financial coaches provide advice and encouragement in a client driven process. Financial coaching is not designed to be a therapeutic relationship or to aid clients in a more acute crisis resolution. That is where financial counseling comes into play.

The Value of a Financial Coach

The great value in coaching is the ongoing relationship and not just one or two appointments. A coach is a sounding board, your accountability partner, your brainstorming partner, and cheerleader. Financial coaches support you as you reach for financial goals creating healthy financial habits.

You determine your goals with help from your coach. Together, you and your coach map out action steps and time frames. And knowing you must check in with your coach helps prompt you to complete those steps. Studies report the effectiveness of financial coaching.

When to Seek a Financial Coach

If you are ready to look to your financial future.

•           You have goals like buying a car, a home, or a realistic spending plan.

•           You are ready to commit to the ongoing work.

•           You’re ready to welcome support in your efforts.

Coaches give vision to the team. They direct and lead the team. Coaches push and pull and bring out the best in the team. And as a financial coach, I provide the same for my clients.

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Kick-Start Your Savings

The saving rate in America this year has been between 5.8% and 5.1% thru June of 2022, however, it’s not where it needs to be. Start today and kick-start your savings. Saving for retirement and having adequate emergency savings for unexpected expenditures such as car repairs or medical expenses is a big part of being financially secure. 

Make Saving a Priority

The mindset of saving must change, and we must realize and make it a priority. Make saving a priority by setting saving goals and developing a plan to meet them. Then, continually assess progress and take action to meet goals when needed. You need a spending plan.

Below are five tips to kick-start your saving:

1. Pay off high-interest debt. The best investment most borrowers can make, is to pay off high-interest consumer debt. For example, if you have a $3,000 credit card balance at 19 percent, and you only pay the minimum payment of 1 to 3 percent of the balance or $20 – $35, whichever is greater, it will take more than 30 years to pay off the loan. With accumulating interest, you will pay more than the item cost in interest charges.

2. Buy a home and pay off the mortgage before you retire. The largest asset of most middle-income families is their home equity. Once you make the last mortgage payment, you will have far lower housing expenses. Further, you have an asset that appreciates and can be borrowed against in emergencies or converted into cash through the sale of the home.

3. Participate in a work-related retirement saving program. Many employees turn down free money from their employer by not signing up for a work-related retirement program such as a 401k plan. If you do decide to participate, with a dollar-for-dollar match that some companies provide, you could likely receive an annual yield of greater than 50 percent of their investment or more.

4. Outside of work, save monthly through an automatic transfer from checking to savings. A great way to start saving because what you don’t see, you probably won’t miss. These savings will provide funds for emergencies, home purchases, school tuition, or retirement. Most banking institutions will, on request, automatically transfer funds monthly from your checking account to a savings account, U.S. Saving Bond, or stock mutual fund. 

5. Earn up to 9.62 percent or more with U.S. Series I Savings Bonds. The composite or earning rate for I bonds issued from May 2022 through October 2022 is 9.62 percent. This rate applies for the first six months you own the bond. I bond earns interest monthly from the first day of the month on the issue date. The interest accrues until the bond reaches 30 years or you cash the bond, whichever comes first. The interest is compounded semiannually. Every six months from the bond’s issue date, interest the bond earned in the six previous months is added to the bond’s principal value, creating a new principal value. Interest is then earned on the new principal. You can cash the bond after 12 months. However, if you cash the bond before it is five years old, you lose the last three months of interest.

Final Thoughts on Saving

Once you realize the need to save, develop a savings goal and kick start your savings.

If you do not have an emergency fund, make this your first savings goal, and then commit to $300, and then $500 on your way to a $1000 emergency fund.  

Devise a plan, strategy, or vehicle to meet the goal. Create a spending plan. Try one or two of the tips above, and in time, you will be on your way to meeting your goal and improving your financial situation.

The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

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What are Spending Plan Tools?

worker with tools

Most people are just not motivated by creating or using a spending plan. Research has shown that 20 – 30 percent of the U.S. population does not use a spending plan. According to a Debt.com survey of over 1000 people, almost a third did not use a spending plan because they felt they did not have enough income. They may have felt like they did not have enough income to use a spending plan, but it’s a good practice to use one anyway, and the spending plan tools below can help you create and manage your spending plan.

What are Spending Plan Tools?

A spending plan tool is simply anything that helps you manage your spending plan. They help you stick to your spending plan and accomplish your goals. Sticking to your spending plan is increasingly important given today’s economic situation.

Additionally, having the right tools is essential when tracking expenses and monitoring income. Luckily, you don’t have to break the bank by buying expensive software or anything like that. From old-school methods to the latest financial applications, there are many tools out there. Below are a few of my favorites.

One of the Oldest is the Envelope System

In the envelope system, you develop your spending plan, cash your check, and distribute your paycheck funds or the funds you created the spending plan for into different envelopes. Next, label envelopes with all your spending categories and put the money into the envelopes. Then you spend the money out of the envelopes for your different spending categories. This method is really good for sticking to your spending plan because when a category or an envelope is empty – it’s empty and there is no more spending in that category unless you make some adjustments to another category.

Spending plans are living and breathing, they change, but an empty envelope is not necessarily a reason to change the spending plan. Perhaps you need to adjust a spending category and spend less in it so you can spend more in another. 

The Spending Plan Calendar as a Spending Plan Tool

This one is my favorites. I am in the process of creating my 2023 spending plan calendars. If you are interested in purchasing one, let me know.

The spending plan calendar is a calendar you use to track your income and expenses by date. To use this tool, pick a day and time during the week. Once a week, and during that time, track your income and expenses in the calendar. The goal is to get into the habit of doing this. I call this working your money. 

Due dates go on the calendar and serve as weekly or monthly reminders to make payments and help to avoid being late. Sharing with your family ensures the family understands the financial priorities of the household. It will also help you feel more in control of your financial life.

Many times, when there are money problems, money going out is the problem, not the money coming in.

There are other tools such as spreadsheets and financial applications you can use to track income and expense categories. Use whatever works best for you. I suggest that you try one or two until you find one that works and helps you start reaching financial goals. 

Not everyone relishes the idea of proactively managing money and maintaining a spending plan. However, creating a spending plan and sticking to it are key steps toward reaching financial goals large and small. Spending plan tools can help you manage your money better.

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A Revolving Saving Account and Your Spending Plan

Revolving savings account

If you find that you are occasionally late on cable or phone bills, or your credit card balance is higher than you would like, try using a revolving savings account. The revolving savings account, although rarely discussed, is a useful money management tool. Revolving savings accounts are a great way to pay for irregular expenses like trips to the vet, new tires for your car, and even holiday spending.

What is a Revolving Savings Account

A revolving savings account, also known as a revolving fund or rolling savings account, is a savings account used to gather money for a specific goal.

And although money is typically added to a revolving savings account via automatic transfer from a paycheck or other account, deposits can be made at any time. And unlike a savings account, which is normally added and not withdrawn from, a revolving savings account is used as needed and replenished regularly, hence the name revolving savings account.

Creating a Revolving Savings Account

In creating your revolving savings account, you may ask how much do I put in to it. The answer to that is going to be different for everyone. To find the amount, you need to know how much you spend on these type of expenses in the past. These are expenses like:

  • Holiday and birthday gifts
  • Car maintenance and registration
  • Health care
  • Annual credit card fees

You can decide at the beginning of the year how much you want to spend on all these categories. Or you can go back through your credit card statements, expenses calendar record, or bank statements to get an idea of how much you should set aside in your revolving savings account. A calendar is an excellent tool to help you manage your money. 

Funds can also come from your spending plan, a specific monthly dollar amount, tax refunds, and bonuses.

The thing is, none of these expenses are unpredictable. If you own a car, you know you’re going to have to get tires at some point, and probably make some other repairs too. These expenses can add up fast. Revolving savings accounts are not made up of bill or emergency fund money.

Building a Better Spending Plan

Use a revolving savings account as a buffer between regular savings and irregular expenses. Over time non-budgeted, irregular expenses can add up and begin to deplete other savings.

It’s another tool that can help you manage your spending. Remember, there is no all-encompassing tool for managing your spending plan. Use what works best for you and your family. A pencil and paper, an Excel spreadsheet, or an automated application, use what works best for you.

A revolving saving account plan can help you in the process of managing your money.The best spending plan is one you can use and stick to consistently and works for your family. When you commit to planning and tracking spending, you will start to see success, and your spending plan will permit you to spend in areas you value and save toward your goals.

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Spending Plan Tips for College Students

College students

It might be tempting to indulge yourself and rely on your parents and others as a financial safety net. However, there comes a time where you must have self-control, and if you can learn to manage your money at this stage in life, your chances of living a more stable financial life are pretty good. Follow the spending plan tips for college students to manage money better.

Keep Track of Your Spending

There are many ways to keep track of your spending as a college student. The simplest is to record every expense in a daily log. You could also keep all your receipts and record your expenses daily or weekly.

It’s easy for the best of us to lose track of how much we have spent over a period.

Using your phone notes application, or another app is also great way to track your expenses quickly and easily. Visually seeing your expenses is a great method to keep your spending in bounds. It does not matter which method you use. If the first one does not work, try another until you find something that you can use and that works for you.

Create a Spending Plan

A spending plan is a plan for meeting expenses and things that you want to do for a specific period. As a college student, having a weekly spending plan is a simple and effective way of managing your money. Additionally, as you plan to do other things, such as school breaks, and other events, create spending plans for them also.

Overspending is something that we all can relate to.

Creating spending plans for yourself will give you peace of mind about your money. Being mindful of your spending plan will also help you keep from impulse buying unnecessary items and instead on things you need.

Once you have your spending plan, stick to it. Keep your spending plan in front of you, where you can see it often. Keep it on your cell phone, a bathroom mirror, or your car dashboard, somewhere where you will regularly see it. And set reminders on your phone to prompt you to check how you are tracking against your spending plan.

As a College Student, Spend Smart

It’s okay to spend your money as money is only good for three things: spending, saving, and giving. It’s yours, you worked hard for it, and it’s okay to spend it.

I just want you to spend smart and spend with a plan in mind.

With all the exciting activities that come with being a college student, there is the temptation to splurge on everything from event tickets to new clothes and shoes. It’s important to keep your spending plan in mind. 

Figure out what your priorities are. If you have bills and rent to pay, maybe that thing that you think you need you don’t. Ask yourself if what you’re about to buy is something that will contribute to your everyday well-being, and act accordingly.

Spending Smart on Food

Use coupons. Coupons might not sound cool, but paying full price is fiscally not cool either. Coupons are available for just about everything if you search hard enough. Saving an extra 10 or 15 percent could mean the difference between a meal out with your friends and eating ramen alone.

According to the Washington Post, the average person in the U.S. wastes about a pound of food per day. Therefore, it’s important to stick to your spending plan and food items that have a longer shelf life. For a college student, wasting food is a spending plan buster, and buying groceries can be a big chunk of your spending plan.

Prepare for the Unexpected Expense

Prepare for unexpected expenses by building up an emergency fund for them. Perhaps you build a 5 or 10 percent cushion into your spending plan to take care of unexpected expenses such as a car repair. This cushion could help you reduce your money-related stress and help you stay focused on your classes. 

Don’t let the excitement take you off your savings game. Try to put a small amount away a week to kick-start your savings.

Although you may not make or have a lot of money in college, you will likely want to experience what college life offers. These spending plan tips for college students can help you manage your money in college and enjoy the experience.

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Methods and Tips to Help You Track Expenses

There is no short answer to the best method for tracking your expenditures question. The best approach is one you feel comfortable enough to stick to every day and follow through on. Follow the tips and methods below to help you track expenses. 

Track Expenses with Pencil and Paper

If you prefer a tech-free solution for tracking your expenses, write down every penny you spend and where you spent it in a notebook. Simply use one page and note the category next to each expenditure. This may be the method to use if you are new to creating spending plans. This approach can tell you immediately where your money is going and immediately make you aware of your spending.

Using an App or Software to Track Expenses

A modern and perhaps more convenient way to track expenses is in a spreadsheet or a web-based financial app. With online apps or software, you can create colorful graphs and charts to illustrate your spending habits. Both methods allow you to quickly and easily enter your expenditures into a spending category daily.

Work Together as a Couple

If you are in a relationship and have combined finances, you will both need to track your expenses. It’s a good idea to choose an online app or another expense-tracking method that can sync your spending with your spouse’s spending so that you don’t blow your budget.

Smartphone apps for couples allow you to track spending on the go. This can prevent the two of you from spending in the same category at the same time and will give you a sense of how much you have left in a spending category so that you can stick to your spending plan.

Keep Tracking spending Even When You Overspend

When tracking your expenses reveals that you overspent in a few categories, it can be tempting to get frustrated, stop tracking expenses, and start again the following month. However, it’s important to continue to track expenses throughout the month so you can identify what you need to change and by how much.

Once you get into the habit of tracking expenses, it will get easier and take less and less time to complete if you adopt an expense-tracking approach that works best for you and are consistent. Consistency in tracking your expenses will help you to be able to save more, spend less, and make the necessary changes to build wealth and reach your financial goals.

Final Thoughts on Tracking Expenses

At the end of each month, review the expenses you tracked and compare what you spent to what you planned according to your spending plan. If you overspent, look for ways to cut spending and if you spent too little, allocate more to your saving goals or debt repayment.

In either case, you’ll want to use what you learn from tracking expenses to make changes to the spending plan for the next month which will put you in a better financial position.

I dare you to track spending for a month or so. I mean really write down or in some other way, track every penny you spend and where you spend it. Once you do this, you will see places where you can spend less and save more. And you will see where you can change your behavior with money. Contact me if I can help you.

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Three Reasons to Track Expenses

Three Reasons to Track Expenses

Tracking your expenses involves identifying and recording your expenditures throughout a specific period. It’s a crucial and basic activity that should ideally do done every day. 

It may seem like a lot of work to itemize your expenses when you decide to start using a spending plan. However, it’s important to understand why you need to track expenses and how to do so with minimal effort can help you successfully commit to tracking your expenses and becoming more aware of your spending.

Monitoring your expenses holds you accountable for your finances in a few ways. Below are three reasons to track expenses that will help you stay accountable.

It Helps You Stick to Your Spending Plan 

After you set up a spending plan, which is a plan for meeting expenses for a given time frame, tracking expenses is essential to keeping you on the right path with your spending plan and a reason to track expenses.

If you don’t track your money, you won’t know when to stop spending in each category like food for example. It is best to track expenses daily.

Tracking your expenses might reveal that your spending plan has too little for food or neglected to account for one-time or occasional expenses such as holiday spending. When you incorporate these infrequent expenses, you build a more realistic and comprehensive spending plan.

Something that you are more likely to stick with.

A spending plan is a living and breathing document that should evolve over time to suit your family’s needs and goals as they change. Recognizing that you are consistently overspending in one category or underspending in another can help you determine whether you need to make cuts or increases in that category for the next month’s spending plan.

Tracking Your Expenses Reveals Spending Issues

Tracking expenditures will make you more aware of your spending habits. If you don’t know where your money is going, you won’t be able to recognize negative spending habits and behaviors that can more easily be changed, and your money starting to work for you rather than against you.

For example, you might realize that your habit of dining out or buying clothing from expensive brands is causing you to run out of money before the month’s end. Tracking expenses can also help you identify problems in how you manage your money.

It Helps You Reach Your Financial Goals 

It’s not enough to stick to your spending plan if you don’t also make strides toward financial goals. Whether you set a goal to build an emergency fund or pay down debt, you’re more likely to achieve goals if you plan for them.

I dare you to track spending for a month or so. I mean really write down or some other way, track every penny you spend and where you spend it. Once you do this, you will see places where you are able to spend less and save more. And you will see, where you can change your behavior with money. Contact me if I can help you.

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Three Thoughts on Spending Plans

person holding red heart shaped lollipops
Three Thoughts on Spending Plans

I have made just about every mistake that you can make with money. I share three thoughts on spending plans to help others avoid some of the pitfalls that come from not knowing how to and mismanaging money.  

Spending plans may not be sexy but they will take you places if you follow them and do them well. 

I believe that the spending plan is one thing that can help many manage money better. My goal is to share my practical experiences and what I have learned with others.

Three thoughts on spending plans and managing money.

The Emergency Fund is Good to Have

I never had an emergency fund while I was making all the mistakes I was making.

I never knew that maybe, possibly, I should have a fund set aside for emergencies. Such a novel idea to me back then. I went into debt paying for car repairs and other emergencies many, many, many times.  

Therefore, my message to you is to be encouraged and know that you can and will do better. You did not get into your financial situation overnight; it was a process and it’s going to be a process getting you to a better financial position. So, an emergency fund is not a do-or-die item, you can still do better without one, I did, but it sure does help.  

However, do not let the fact that you do not have an emergency fund stop you from moving forward with your spending plan and managing your money better. 

Tracking Your Spending is Important

I believe that tracking your spending is one of the most powerful things you can do when managing money and expenses.

It provides you with a lot of information that can help you win with money. It sets you up for success with spending category numbers that are better than anything else you could come up with on your own.

A spending plan is just an estimate of how you are going to spend your money over a given time period.

Make great estimates and make great spending plans you can stick to.

My Last Thought is Consistency

To manage money effectively, you should strive to be consistent in your management of it.  To effectively manage your money, you have to know where it is going, and you can’t do this without consistently tracking and keeping track of where your money is going.  Pick a day, a time, and a place to work your money and consistently work your money during those times. 

Get into the habit of it!     

There you have it. Three thoughts on spending plans. Again, spending plans aren’t very sexy, but they will take you places. Share this with people that you think may benefit. Comment below and let us know how it’s going.

https://goldenrules.biz

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Four Recipes to Financial Success
Four Recipes to Financial Success

Four Recipes to Financial Success

Below are four recipes to financial success. By that, I mean that if you focus and do just one of these things well, the chances of having success with your finances will increase. You can be successful and find a level of success that will propel you to even more success. Everything starts somewhere, and the beginning to making better financial decisions can start with the recipes or tips below.

A Recipe to Financial Success is Having a Plan for Your Money

Having a plan makes a big difference in whether or not we win with money. By plan I mean having a spending plan. I like to call it a spending plan for two reasons. One, it is a plan to spend your money. Two, when you hear the word budget, you think of restriction or something you cannot do.

Calling it a spending plan gives you permission to spend on purpose because it’s your money anyway.  

Spend Less Than You Earn

Live within your means. Just because you have created a spending plan does not mean that you are home free. Now you must stick to your spending plan, which is a whole other thing. You cannot be successful and spend more than you allocated for a particular spending category in your spending plan. So, for example, if you plan to spend $300 at the grocery store, you cannot go out and spend $400. This kind of overspending is a destroyer of spending plans.         

Financial Success is Preparing for Unexpected Financial Events

Another issue for spending plans is the unexpected event. Let’s say you created your spending plan and are moving well through the month. You are following your spending plan, and then an unexpected event happens. Your mom or dad gets sick, and you must travel to see them.

Emergencies or contingencies are going to happen, and although we know that they are going to happen, you cannot plan for them specifically, but you can plan for them in a general way by saving up an emergency or contingency fund.

With this fund, you can take care of emergencies and contingencies when they come, and it does not affect your spending plan. A good rule of thumb is for three to six months of expenses into an emergency or contingency fund.   

Preparing for Expected Events is a Recipe for Financial Success

Preparing for expected events is another key to financial success. You have spent most of your adult life doing things the “right” way. You planned to spend your money, you saved, and lived within your means. Then you get to the point in your life where your children are ready to go to college, and you have not saved enough.

How about retirement, are you ready? Have you saved enough? If you have not, what do you do?

The other side of this is to plan for these expenses and begin to save for them. The key is to determine the number or amount you are trying to reach. How much will you need to save for your children’s education? How much will you need to retire the way that you want to? Once you find these numbers, you can begin to save and reach them. Preparation is the key.  

These are just some of the keys to financial success…can you think of others?

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Tips for Reducing Financial Stress

tips for reducing financial stress

If we are honest with ourselves sometimes our financial stress is caused by our expectations not being met. We want things to go one way with our finances and they go the other. Below are some tips for reducing financial stress in your life.

Losing a job, the inability to find full-time work, paying bills on time, and not being able to deal with the increasing costs of living can be disappointing.

When this happens, when our financial reality does not line up with our expectations, we can sometimes become stressed. Try the following tips to help you reduce your financial stress.

Set SMART Financial Goals to Reduce Financial Stress

Goals provide course of action. And financial goals provide direction for your financial matters. They should determine how you spend your time and your money. When setting goals, decide what you want, where you want to be, and what you want your money to do. Further, when you set goals, set goals that are SMART (specific, measurable, achievable, realistic, and have a time constraint).

The best goals are the ones that cause you to “stretch” as you do your best to reach them.

Make Your Time and Money a Priority

Use the “80-20 Rule” originated by Italian economist Vilfredo Pareto. The 80-20 rule says that “80 percent of the reward comes from 20 percent of the effort.” The key to prioritizing is to identify the valuable 20 percent.

Once identified, prioritize your time to work on the items with the greatest reward. If you value managing money well, prioritize the time it takes to manage it well. Knowing where you stand with your finances will help you reduce feelings of stress.

Take Some of the Stress Off and Be Flexible wIth Your Spending

According to Peter Drucker, a management consultant, author, educator, and the described father of modern management, “Doing the right thing is more important than doing things right.” Doing the right thing is effectiveness; doing things right is efficiency.

Be flexible when working on your money, focus first on the urgent, effective task, then concentrate on the important, efficient task.

Reduce Financial Stress by Planning To Spend Your Money

Using time to think and plan is using time wisely. Some would say that if you fail to take time for planning, you are, in effect, planning to fail. Additionally, be consistent with that time. If Monday after work is your money management time, then work your money Mondays after work.

As I have written before, managing money is a job, it takes time, so plan accordingly.

The tips for reducing financial stress above can help you reduce money stress in your life. Be careful with stress as it can cause mental, emotional, and physical health issues. How do you manage financial stress? I would love to hear from you.

https://goldenrules.biz/

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Do You Know Where Your Money is Going?

Do you know where is your money going? Do you know where you are spending every dollar? If I were to ask you how much money you spent last month eating outside of your home, for example, could you give a specific answer?  

If you cannot answer specifically, to the dollar, you could manage money more effectively by knowing where it is going, where it is being spent. 

And once you know, you can make adjustments to your spending and live within your means. And it’s just good to know.

To do this you need to keep track of where you are spending your money. 

How do you keep track of your spending

There are several ways that you can keep track of where you are spending your money. 

A lot of people use debit cards for their expenses and if you are one of them, you could keep the receipts of all your expenses and write them down once a week or so.  You could record everything in your check register as you purchase items. Some banks are now including a place in the check register for writing down debit card transactions.

You could use a financial app to keep track of your transactions or a spreadsheet, or even a piece of paper in a notebook. I currently use an app to track all of my expenses.

Whatever you decide to use, remember, the goal is to track your spending – use something. Try something and see if it works. If it does not work, try something else. 

Remember, you cannot manage your money effectively if you do not know where it is going. 

Knowing where your money is going and the spending plan

Too effectively manage your money, it really helps to have a spending plan. 

In creating a realistic spending plan, the first step is to know where you are spending your money and tracking your spending. After you track your spending, and you get a way or history of how you spent your money last week; last month; last year.  That history helps you develop your spending plan for this week; this month; this year. 

All a spending plan is an estimate of how you are going to spend your money…the better the estimate, the easier it is to stick to it which is critical when working with a spending plan.    

Additionally, in working with a spending plan, once you know and realize that you are spending too much money eating out, for example, you have a starting place to change that habit or behavior and decrease spending.  As you begin to see where your money is being spent and where its going, you will find areas in your spending that you can cut to help you meet your goals.

Final thoughts on knowing where your money is going

knowing where your money is being spent gives you control over your finances and giver you peace of mind about your financial situation.

When you know where your money is going and you are using a spending plan, you are more likely to manage your money better. You are telling your money where to go, and it is going and doing what you want it to do.

It’s working for you and not the other way around. As it should…its your money. Like this post and share this with others that may benefit. Contact me if I can help you create a winning spending plan.

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Reaching for Financial Goals in 2022

Are you reaching for financial goals in 2022? Although creating goals is something that is popular on January 1st, as we reach the middle of the year, there’s still time to reach your financial goals this year.

Goals are good as they provide direction and a path to follow to achieve an objective. 

Defining Goals

According to Dictionary.com, goals are the result or achievement toward which effort is directed. Short-term goals will activate soon, a day, week, possibly a few months. Long-term goals are achieved over a longer period; semester, one year, first quarter, five years.   

Financial goals help you move towards your objectives with money. For example, if your objective is to save up enough money for an emergency fund ($1000), your goal might be to trim some expenses and save a certain dollar amount weekly or monthly until you reach the $1000 goal.

Reaching Financial Goals in 2022: Four Ways Goals help you Meet your Objectives

As you are developing financial goals for next year, keep in mind that goals affect your outcome.  They help you meet your end objective in four ways.

  1. Goals give you a choice in the matter. With a goal, now you must choose whether I go out to eat for lunch or bring my lunch to work. Goals focus your attention towards your objective and away from distractions.
  2. When you have goals in place to meet objectives, you become energized about meeting your goals and you increase the effort toward them. A goal will induce greater effort toward saving money than no goal at all. No one wants to fail at a goal.        
  3. When you have goals your ability to work through setbacks increases. So, because of an unexpected expense, you are not able to save as much as you wanted to this month. Goals will help you to work through this set back, keep pursuing the goal, and keep you on track to saving in the next month.
  4. Goals can lead to individuals developing and changing the behavior. The goal of saving money will help you think about saving money and help develop a saving behavior. 

SMART Goals

 When you set your goals use the S.M.A.R.T. test.  S.M.A.R.T. goals are:

  1. Specific – detailed and focused and specify the result.

Example:  I want to save $1000 so I can have a beginner emergency fund, the final objective.

  • Measurable – quantifiable. There must be a method of comparison that indicates when the goal is reached.

Example:  I want to save $100 per month to reach my goal of $1000 saved.    

  • Action-Oriented – tells what is to be done to reach the goal. Action Verb tells the type of activity performed. You want to keep the goal in front of you.  Write the goal down and keep a copy in your purse or wallet. Put a copy of your goal on the mirror in your bathroom; keep it in front of you as a reminder.    

Example:  I will save $100 dollars per month until I reach $1000. 

  • Realistic – practical, achievable, and possible. Goals must motivate individuals to improve and reach attainable ends (not too easy or too hard).

Example:   I plan to save $20 per week. 

  • Time constrained – scheduled or regulated by time.

Example:  Save $1000 by the end of the year. 

When your goals meet the S.M.A.R.T. test, they will be better goals and more attainable.

Reaching Financial Goals in 2022: Did You Know

Did you know that only 5% of the population has clearly defined written goals? According to a recent study, people who write their goals are more successful at achieving them, whereas those who did not write goals down were only moderately successful. 

The value of writing down goals, cannot be understated.   

You can begin reaching financial goals in 2022 by setting objectives for what you want to achieve with your finances, and then develop short-term and long-term goals. Celebrate the achievement of each goal, and by all means, stay focused. I am a financial coach and would love to help you set some SMART financial goals. Contact me if you are ready to be coached.    

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Fixed and Variable Expenses

My spending plan and your spending plan contain fixed and variable expenses. What are fixed and variable expenses? And what do they mean for your spending plan.

What are fixed expenses?

Generally, fixed expenses are expense in your spending plan that are the same each month. Fixed Fixed expenses do not change with out considerable effort.

What makes this important is that fixed expenses are much easier to plan for in your spending plan than variable expenses.

Examples of normal fixed expenses include car payments and house or rent payments. Although your house payment can change by signing a new lease or a car payment may change by refinancing your car loan, these are not easy to do without considerable effort and won’t change until then.

Other examples of fixed expenses include your car insurance, your cell phone plan, and loan payments. And again you would need to take considerable time and effort to change these payment amounts. Additionally, the biggest part of your spending plan is normally your fixed expenses.

If you are just starting to plan to spend your money, and you need to cut expenses, focus on the variable expenses.

What are variable expenses?

Variable or flexible expenses are the ones that are different for week to week, and month to month. Your expenses that change and always different like electricity, and weekly or monthly food, and gas are your variable expenses.

If you are new to creating and using a spending plan, once you start tracking your expenses, you will be able to find variable expenses to cut. Tracking your spending will help you to think about your purchases and you will see the purchases do not line up with your values. Additionally, this will help you keep unnecessary spending under control.

Final thoughts

As you are working your spending plan expenses, start with listing fixed expenses first and then listing variable expenses. Remember, your first variable listing should be savings. Therefore, every month you are saving something and that amount changes, it’s variable, based on the other spending plan expenses.

Along with income, fixed and variable expenses categories makeup the parts of the spending plan. And basically, fixed expenses are the same every week or month. Variable expenses are different all the time. Tracking spending will help you to see where you can possibly cut some of your variable expenses. Take care and contact me if I can help you.

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Five Tips for a Better Spending Plan

Creating and working on your spending plan is a way you manage your money better, and below are five tips for a better spending plan. 

There are many benefits to creating a spending plan. 

For all the pitfalls and changes that come when creating and working with a spending plan, here are some tips that can help.     

Step 1.   Call your budget a spending plan.

Instead of calling it a budget, call it a spending plan. I do not know what it is but when most of us hear the word budget, we think of bad things, lack of control, and things we can’t do. 

So instead, call it a spending plan and think of it as a way to be a better steward of your money. Just planning to spend your money, a spending plan, sounds like you are doing better.

Before you receive any money from a paycheck or any other income for the pay period, you want to sit down and “plan to spend” that income. On purpose, you want to plan out where all your paycheck will be spent. Often, we do not plan to spend our money and end up letting others spend our money for us as we buy things that we do not plan to. 

Step 2. Track where your money is going.

It’s difficult to effectively manage your money if you do not know where it is going.

Tracking your spending lets you know exactly where every dollar is going. From the grocery store to the gas pump, tracking your spending will tell you where your money went. Tracking allows you to have a more accurate spending plan because now you know how much you spent at the grocery store last week or month. Sit down once a week with your receipts and write down where it was spent, how much was spent, and what the money was spent for. 

You will see patterns in your spending that you did not notice before and behavior that you will want to change, and that is the key to managing money better, changing behavior.

Step 3. Cut your expenses.

Once you track your expenses for a while, you will have a much better understanding of how, where, and what you are spending your money on. You are not ready and able to cut unnecessary expenses. 

Get radical and go into deal mode and use coupons to save money. Make a list for all shopping trips and never, never, never go shopping hungry. Business is very adept at getting you to spend your money; it’s called marketing. Instead, stay home and read, exercise, or do some yard works to keep your mind elsewhere. Even try car polling and taking your lunch to work.   

Take a good hard look at all your spending and see where you can cut.  

Set up some financial goals for yourself like an emergency fund or a Christmas savings account. Find a way to keep your goals in front of you. Tape them to your bathroom mirror. Keep a copy of them on the dashboard of your car. Take them with you when you are out and about. Refer to them often, they will help you stay on track and prevent impulse buying.      

Step 4. If need be, increase income.

If you have less money coming in than going out, and after cutting expenses, you still have part of the month left after the money is gone, you may want to try and increase your income. A second job to help pay off debt is not a bad in the short term. 

Be sure to have a plan or goal for the money that you make at a second job and stick to the plan. If it’s to pay bills, then it’s to pay bills. Maybe you start a small business doing something you like to do or do well for extra income. The possibilities are endless.    

Step 5. Use spending plan tools to help you manage money better.

So, you ask, “What are spending plan tools?” A spending plan tool is something that helps manage the spending plan. 

Probably one of the oldest and best tools is the envelope system. 

In the envelope system, you develop a spending plan, cash your check and distribute your paycheck funds into different envelopes with your spending categories labeled on the envelopes. When a particular envelope is empty, its empty and no more spending in that category.

There are other tools such as calendars which help you to keep track of payment amounts and due dates. It’s a helpful way to estimate how much money will flow in and out in a given month. Some people will use spreadsheets to track the different spending categories.

Whether you use all these tips or none, do something different to manage your finances. Do not keep doing the same thing and expecting a different result; that’s insanity. How do you manage your spending plan? Comment below and subscribe to get spending plan and financial management tips. 

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Teaching Children about Saving Money

Children are great learners. Maybe it’s because they have not yet developed the attitudes and behaviors that many of us have. They control or have some input, as consumers, on a lot of household spending. They do not need as much help learning to spend as they do learning how to save.

Teaching children about saving money and giving children a better understanding of what is at stake is essential for their growth and development with money. Therefore, consider introducing saving and teaching your children about saving money, as early as elementary school or even sooner. Preschool-age children are curious about money and actually want to accept some responsibility and may welcome the opportunity to save money. There is never a better time to teach children about money and saving. Even if your kids are a bit older, there is no time like the present.

Setting kids on the path to becoming good savers is not difficult and can actually be fun.  The following are a few activities that parents can do with their children, even if they do not feel financially well informed themselves.

  • Buy or make a piggy bank and decorate it to help children save money. This can be an engaging activity for the parent and child. This activity can also get your children excited about saving. Let them get as creative as they like, this will help them feel connected to the saving effort. 
  • Help your children set and work toward a modest, short-term savings goal. For young children, it can be something like a special toy, or video game. Something that they can reach fairly easily. For teens, the goal can be more significant, like saving for a class trip or the prom. Resist the temptation of starting with goals that are too big and too far in the future. If you can afford to, offer your kids age-appropriate extra jobs to earn money.
  • Encourage your child to put coins and savings into the piggy bank. If the bank is transparent, the child will be able to track progress visually. Piggy banks are great for children because they enable immediate action, a place to save gifts or allowance right away. 
  • While you are teaching your children about saving money, consider setting a family saving goal for something like a fun vacation. This is a great opportunity for parents to set a good example, regardless of how they have managed money in the past.  Additionally, initiate a conversation with your children about money and finances. You and your family can also work together collecting loose change or maybe having a yard sale to help establish saving as a good habit and a family value. 
  • You can also help kids become good savers by reading money related stories and playing money games with them. Any experiences with money, and how to do good things with money will help teach children. Additionally, there is a wide array of financial education programs and resources available to help you teach your children about money and saving. 

Remember, when teaching children about saving money, if your children’s first saving experience is exciting and fun, they are more likely to want to do it repeatedly. And they can never be too young to learn something about money. Remember, they are great learners. Take care.   

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How to Control Leaks in Spending

Does it seem you never have enough money to buy the things you would like to or need for your family? If you answered yes, you may have some leaks in spending. That means you are spending money without knowing where it is going. This is a problem that can threaten your financial security. Controlling leaks in your spending can help you get more of those things that you want for your family. Below are some tips to help in control leaks in spending.

1.Keep meaningful records of where your money goes.

keeping a record of your spending will show where your money is being spent. From this record you can decide whether you should make changes to your spending plan and what changes to make. As you keep a record of your spending, you will begin to see areas that you will be able to cut back on or eliminate. 

Spending is a leak only if the spender is surprised at the amount spent and feels that it is not worth the money.

2. Plan to spend your money to control leaks in spending.

Planning to spend your money can be well worth the effort. That is because it can help you spend your money wisely rather than letting it disappear without a trace. Start with your writing down your income, and then write down your spending categories and how much money you will allocate to each one. With careful planning, you will begin to get many of those things you wanted for your family.

3. Live within your means.

Living within your means, means that you are not spending more than you make. You are using your money wisely and not spending money on things that you cannot afford or pay for right now. If you live within your means, you will never need a credit card or small revolving credit loans. 

4. Buy only for what you need or use.

Buying in bundles or buying more features than you need, or use will slowly drain your spending plan, because the little things add up. For example, if you are not watching those extra channels on cable or using your TV or movie subscription service like Netflix, or using extra features on your phone, consider scaling back to what you do use to cut down on cost.   

5. Plan your shopping trips to control leaks in spending.

Before heading out to the store, take note of what you have and what you need. Try not to shop when you do not need anything. For example, going shopping when you bored or going shopping just to kill time.  Have you ever walked into a store to get one thing and came out with a cart full of merchandise? Where all these items necessary? How will this purchase affect your budget? When you are going shopping, making a list beforehand and stick to it. This will prevent you from going over your budget and making unnecessary purchases.

Just stopping these leaks in spending will help you purchase some of the things that you want to for your family. Additionally, by tracking spending, you will begin to see areas where you will be able to where you can save money by cutting some expenses. Try these tips, they can help you control leaks in spending and comment below. Take care.   

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Using Values to Guide Money Management

Today I want to talk a little about using values to guide money management. Values are personal beliefs about what you regard as worthy and true. They tend to reflect your upbringing, and they tend to change very little without conscious effort. Values are the worth of something in terms of the amount for which something can be exchanged. People do what they value.  

Your goals should be based on your values. The more harmonious your values are to your goals with money, the greater the likelihood of attaining them. 

To understand better how you value money, answer this question. If you had an extra $1000, what would you do with it?  Seriously think about this. There are a lot of things you could do, but you decided based on your values. 

Understanding Values

Whatever you decide, it’s your decision, and it’s not about right or wrong.  It’s about your values and your awareness. Understanding your values will help you be a better steward and create a better spending plan.  Remember, people do what they value.

One of the things I ask clients to do is to think about and understand what they value. Because people do what they value, knowing and understanding your core values can help you in all that you do, especially in managing your money.    

Once you a better understanding of your values, you can consciously connect your spending and your spending plan to your values.  And you can create a spending plan that works for you and is easier to stick to. 

Additionally, by understanding your values, you can make goals for your money and your finances that reflect your values, and therefore you have a better chance of reaching your goals and the goals are better. Because your goals reflect your values.  So, instead of buying a big-screen TV with a credit card, maybe you make a goal to save money and buy it with cash because you value the freedom of not paying the interest you will be putting on your credit card. Now you are using values to guide money management. 

Determining Your Core Values

So how do you determine what your values are? Below is a listing of values that can get you started to help you determine your values. 

Ambitious, Caring, Charity, Curious, Dependable, Enthusiastic, Ethical,Flexible, Freedom, Generous, Growth, Happiness, Health, Innovation, Intelligence, Loving, Loyal, Optimistic, Personal development, Popularity,Professionalism, Punctuality, Quality, Recognition, Relationships, Reliability,Safety, Security, Service, Spirituality, Stability, Thankfulness, Traditionalism, Understanding, Wealth, Well-being, Wisdom

If I asked you what you valued, what would you say?

  1. Write down the values that resonate with you.  Add any you think of that are not on the list.
  2. Select the values that you think most accurately describes you and then categorize values into related groups
  3. Once you have related groups of values, identify a central theme of the group.
  4. Next, determine your top core values by ranking your central themes in order of importance.  If you must narrow your list to under 6 to core values.

Values are unique and influenced by upbringing and experiences.

Keep in mind that it’s important to stay conscious of your values throughout your life because, like spending plans, they can change as your career and personal life develops.

Thanks for reading and sharing with others who may benefit. Take care.

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Spending Plan Tips for Graduates

Congratulations! You finally made it and graduated, and now it’s time to face a different world. And that includes planning to spend your money. Keep the following spending plan tips for graduates in mind as you get out in the world and start working your first real job.

Use a Spending Plan and Plan your Spending

You are possibly going to have more money than you ever have. It’s going to be a smart move, on your part to plan to spend it. Money is good for three things, and spending is one of the three things, so it’s okay to spend just spend with a plan. 

Sit down with a piece of paper and a pencil and just write out where you are going to spend your money; how much, where, and what for. 

By doing this, you are creating a spending plan. Later you may want to move to a spreadsheet or app, but to start, use paper and pencil, keep it simple.       

Tracking Your Expenses helps You to Be More Aware

Track your spending if you want to manage your money better. There are lots, and lots of ways to track your spending…you pick one. You can track by app, spreadsheet, or on your phone, and it does not matter which as long as you track.

Record every expense every time.

Some expenses are just easy to forget. Here I am mainly talking about things automatically drafted, like the streaming subscription or maybe a credit payment. Car insurance payments every six months or once a year is another. Keep these expenses written down in your log so you do not forget them. And get a receipt from every place you shop or eat; this will help when it comes time to remember and record.

Also, contingencies and emergencies are going to happen. Do not forget to save for these. A good emergency fund will cover expenses for a couple of months and give you peace of mind.   

Again, congratulations! You have worked hard, sacrificed, and now it’s time to celebrate. After your celebration is over, start planning your spending and use these spending plan tips for graduates to creating a spending plan that works for you. It will benefit you as you grow in your career and life. Take care.   

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To Do Better with Money Track Your Spending 

If you are not tracking your income and expenses, you can’t manage your money effectively. To do better with money track your spending.   

Tracking your spending, on the surface, appears to be straightforward and simple, but it can be a complex process and quite difficult. 

It takes consistency to track your spending which is the hard part.  And tracking your spending can be overwhelming.   

To deal with this difficulty I tell clients to get into the habit of consistently recording your expenses. Use can use any type of log or spreadsheet, even your phone, to record expenses.

Whatever you use as your log, even if it’s a piece of paper, every time you receive money, you should record it in your log. 

Whether it’s from a paycheck or gambling winnings, record it in the log. And every time you spend money, whether it is a bill or that cup of morning coffee, record it. 

Track Your Spending Every time, every time, every time!

Tracking your spending makes your spending more real. You will begin to see it. You will see it come in and go out and begin to see it as a tool to help you reach financial goals.

It will give you a sense of control.  

Your awareness of your money and your behavior with money will sharpen, allowing you to make changes which will improve your financial situation. 

This is an important money skill. 

Here are a few tips to help you in tracking your spending:

  • Make it a routine.  Once you get into the habit of tracking your spending, I promise, it will get easier. Always, do what works for you. No one system or way is perfect for everybody. The important thing is to track your spending. How you do is up to you!
  • Be more careful with transactions that are easily forgotten. Some transactions, online transactions, transactions without a receipt, can be quickly forgotten. Take special steps to remember these. 
  • Get a receipt for everything. There are not too many places where you can spend money and not get a receipt. If they do not give you one, ask for one. Additionally, make it a habit of putting all your receipts in one place so that you do not forget where they are.
  • It is best to record your transactions daily. Although you can track expenses once a week, you may find this hard to do. By tracking expenses daily, you do not run into the problems that you would by tracking them weekly such as I can’t remember a transaction or can’t find a receipt, etc.

Recording expenses will make you more connected to what you spend. 

It will make you think more about each purchase, and you will begin to see if your purchases line up with your values.  This may help you to keep unnecessary spending under control.   

Tracking your spending is a rewarding process. 

It will paint a picture of your spending habits as they exist and not as you think they exist.  You can then use this information to create a spending plan, or, at the least, to serve as a picture of where your money actually goes.

How do you track your spending?  Share your thoughts and subscribe to the GoldenRules Blog and learn how to create a winning spending plan for you and your family. 

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Three Money management Tips for 2022

It’s still closer to the beginning of the year than the end, and a great time to prepare and plan to manage your money better in 2022.  One of the reasons why people fail with their finances is poor planning.  Here is how it usually goes…

It is the first of the year and you decide that you want to manage your
money better, and you are going to budget your money.  So, you make out a
spending plan and before you know it, because of poor planning, you spent more at the grocery store in the first three weeks of the month than you planned in your budget.  Therefore, you get frustrated and quit all the while
thinking that this budget stuff just does not work for you.     

Below are three tips to help you manage you money in 2022.

Track Your spending

One of the most important things in managing your finances is tracking where
your money is going.  You have to know where and how much money you are
spending to effectively manage it.  The word is effective.  You can manage your money without tracking it, that’s what most of us do, but to really manage it effectively you got to know where you are spending your money.  Managing money is about behavior and tracking your money allows you to see behavior(s) that needs to be changed.

I dare you to track spending for a month or so.  I mean really write down and keep track of every penny that you spend and where you spend it.  Once you do this you will see places where you will be able to spend less and save more.  And you will see where you can change your behavior with money.

Develop Goals for Your Finances to Manage Money in 2022

First things first and goals point the way to first.  Everything starts somewhere and like laying bricks if the first course is straight, we know the wall will be straight.  If we start in the right way we can finish in the right way.  You must have goals for your finances.  Develop some S.M.A.R.T. goals (Specific, Measureable, Attainable/Actionable, and Realistic, with some Time frame).  If you make your goals SMART you will be more adept to achieve them.  Goals are like a mission statement in business.  They tell you what you are going to do and how consistently.  When you are in doubt, or maybe need direction as to what to do with your finances, your goals will point the way. 

So, sit down this month and think about what you want your finances to look like, and what you want to do with your money. Then write down some SMART financial goals for 2022.

Plan your Spending to Manage Money in 2022

Now comes the fun part — spending your money.  Call your budget a spending plan, That is, a plan to spend your money.  One of the three things money is good for is spending (the other two are saving and giving by the way).  So, it’s okay to spend it, it’s yours and you worked hard for it, I just want you to plan to spend it. 

Next, take all the information from the month worth of tracking your spending and plan the next month based on what you spent that month.  For example, if you spent $400 at the grocery store last month, you will probably spend around $400 next month.  At least you will be a lot closer than just picking a number out of the air.  Remember, all a spending plan is, is an estimate of how you will spend your money.  The better you can make the estimate, the better the spending plan.

By setting goals for your finances, tracking your spending, and planning to spend your money, you can manage your money better in 2022.

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Manage Money Better By Tracking Spending

If you want to manage money better, it helps to know where you are spending your money and where it’s going. One way to do this is to track spending.    

Tracking your spending, on the surface, appears to be pretty simple, but it can be a complex process and quite difficult.

That is because it takes consistency to track your spending effectively and in a way that helps you manage your money.   

Below are several tips to help you track your spending and manage your money better.  

•           Make it a routine. Once you get into the habit of tracking your spending, it will become easier. And always, do what works for you. No one system is perfect for everybody. So, maybe you track your spending Monday after work or Tuesdays, before work, or maybe Sunday after church. Weekly, sit down with all your receipts or bank statements and record how much you spent, where you spent the money, and what for.  For example, I spent $1.18 at McDonalds for a sausage biscuit. The important thing is to track your spending. How you do this is up to you!

•           Be more careful with transactions that are easily forgotten. Some transactions, online transactions, transactions without a receipt, can be quickly forgotten. Take special steps to remember these.

•           Get a receipt for everything. There are not too many places that will not give you a receipt. If they do not give you one, ask for one. Additionally, if you are keeping receipts, make it a habit of putting all your receipts in one place so that you know where to find them and do not forget where you put them.

•           It is best to record your transactions daily.  Although you can track expenses once a week, you may find this hard to do. By tracking expenses daily, you do not run into the consistency problems that you would by tracking them weekly, such as I can’t remember a transaction or can’t find a receipt, etc.

Recording expenses will make you more connected to what and where you spend.

Tracking your spending will make you think more about each purchase and may help you to keep unnecessary spending under control.  

Tracking your spending is a rewarding process.

It will paint a picture of your spending habits as they exist and not as you think they are. You can then use this information to create a spending plan, or, at the least, to serve as a picture of where your money actually goes.

How do you track spending? Share your thoughts and subscribe to the GoldenRules Blog here, and learn how to create a winning spending plan for you and your family.

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Money is Good for Three Things

This spring as you are spending your money, keep in mind
the three things money is good for.  If I were to ask you what three
things money was good for what would you say? When I am
teaching how to create a winning spending
plan, I always ask this question and get a lot of different answers. 

Let me ask it in another way. 

The things you do with money, can be put into three categories, what are they?

When I ask this way, I always get similar answers.  Answers like It’s good for paying bills, buying stuff, saving, investing, and going shopping. 

And then I would say something to the effect of okay, we got spending and saving.  What is the third thing?  I put investing into the saving category. 

It’s interesting because at this point most of my students go blank.  Then
I ask again and say ok money is good for three things, spending, saving,
and…?  What are the three things we all do with money?

Most of the time I get no response and ask them to think about and move forward with the class.

My point in all of that is to say that it’s okay to spend your money. It’s yours, you earned it, and you should spend it.  Its okay to spend your money, but you should also spend it with a plan in mind.  My goal is to help you create a spending that helps you spend within some parameters. 

What Are the Three Things?

Simply put, money is good for three things: spending, saving, and giving.  Interestingly, sometimes when we talk about money, we forget about giving.  That is a discussion for another day. 

I am a Financial Coach, and I would like to help you navigate your finances and create a winning spending plan for you and your family.  Contact me
here, and we will do an assessment and get started improving your finances one GoldneRule at a time.  Take care.

This post is a repost from December 2021.

 

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7 Tips to Help You Get Out of Debt

There is good debt — such as borrowing money to buy a home, enhance your career skills, or pay for your children’s education – and there is bad debt, such as using credit cards and not paying balances in full every month.     

Erasing the bad debt is important in helping you manage your finances and reach your financial goals.  Below are seven tips to help you get out of debt.

  • Know what you owe. Knowing your monthly income and expenses is essential to improving your financial situation. This is because it is difficult to improve unless you know where you are. If you are serious about getting out of debt, take the time to list all your outstanding debts and include how much you owe, your monthly payment, and the interest rate. Once you do this you will know what you owe, and you can begin to tackle your debts.   
  • Check your debt limit. If you are concerned that you may have more debt than you can handle, check to see if your debt is within safe limits. There are several ways to see if your monthly credit payments are taking too much of your income such as the debt-to-income ratio.     
  • Pay off your smallest loan first. Financial experts say to pay off your smallest debt first.  This will give you a sense of accomplishment and success as you tackle the next smallest debt. Additionally, you should use the money that you played off the first debt to now help you pay the second debt. You continue this snowball effect with all your debts
  • Increase your monthly net income. You can do this in two ways: earn more income or reduce your monthly expenses. Some suggest you do both. A part-time job or maybe you have a hobby that could be developed to produce additional income. As far as reducing income is concerned, you will be surprised how much you can reduce your expenses by living more frugally and using a spending plan. Taking your lunch to work and cutting back on cable and cell phone service could help you find an extra $500 a month to help reduce your debt.    
  • Stop using credit cards and pay cash. Give them to a friend for safekeeping, freeze them in a block of ice, or put them in a safe deposit box, but do not use them. By paying cash for things instead of using credit, you could save thousands of dollars in interest and help you become debt-free.  
  • Call the credit card companies and ask to renegotiate the interest rate, or inquire about special payment programs where fees such as interest and late payments may be suspended for a certain amount of time. 
  • Start today. When it comes to getting out of debt, start sacrificing today. Lots of people talk about getting out of debt, but they fail to act. Do not follow their example and start today. Once you get started, you will begin to see how you are changing your family’s future.    

These tips can help you get out of debt.  Be consistent and persistent because you did not get into debt overnight. It may take some time to get out of debt. Contact me here if I can help you get out of debt. 

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Inflation and Your Spending Plan

Inflation worries are everywhere as you cannot listen to the news without hearing the word inflation. What does it all mean for your spending plan or budget?

Inflation fear is everywhere. Prices are rising higher and higher and, you cannot listen to the news without hearing the word inflation. Inflation and your spending plan, what does it all mean?

What Is Inflation?

Inflation is the decline of purchasing power of a currency over time. It’s reflected in the increase of an average price level of a basket of selected goods and services in an economy over time.

The rise in prices, expressed as a percentage, means that your dollar buys less than prior periods.

Inflation can raise the value of tangible assets like personal real property and erode the value of cash holdings.

What Causes Inflation?

An increase in the supply of money is the root of inflation, and this can play out through several different mechanisms in the economy. However, in all such cases, the money supply increases and your money loses its purchasing power.

Working With Inflation and Your Spending Plan

Below are some tips to help you stay with your spending plan during times when your money loses some of its purchasing power. 

Create a Spending Plan

One of the best ways to beat inflation is to get on and stick to a spending plan to ensure you are paying attention to how much you are spending.  

This will ensure that you are watching what you spend, and only spending what you plan to spend. Regardless of how inflation affects the cost of something, like gas.

Be sure to set spending plan limits for things inflation might affect, such as clothing, food, gas, and housing.

Allocate your money at the beginning of the month, and then stick to the spending limits you have set.

Be flexible by adjusting spending amounts between budget categories if need be but resist the urge to dip into emergency savings and other funds. 

Your spending plan will help you determine your spending priorities. And your spending plan priorities will help you decide what items are the most important for you to spend money on and which you can pass on. 

Look for Cheaper and Free Alternatives

You can beat inflation price increases by looking for alternative and less expensive store brands. Additionally, using coupons and shopping at bulk stores can help you save money on your spending plan. 

Consider cutting out unnecessary expenses like the gym membership or your daily coffee if rising prices are eating into your spending plan.  

Explore free and cheaper things to do in your area to help beat inflation. You could take advantage of free shows and events, and some museums that offer free admission. 

Choosing to rent a movie and stay in and cook a meal instead of eating out is always cheaper.   

Remember Your Priorities

And always keep your financial priorities and goals top of mind. 

Do not overuse credit cards and pile up debt during inflationary times that you will have to take care of later.

Additionally, if you are saving or investing your money, continue to save and invest.  Always pay yourself first. 

What are some ways you beat inflation in your spending plan?  Comment on this and let us know.  Contact me here if I can help you with your spending plan.

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Managing Money in a Marriage Relationship

How do you take two different people, with two different attitudes about money, different situations, and circumstances, to come together and effectively manage money? It is the love of money that is the root of all evil, not your spouse or potential spouse.

One of the most difficult things to do with money is to handle it in a marriage relationship.  What I like to call the marriage money dilemma.  Two people, perhaps born into different circumstances and situations, and different cultures, with different thoughts about everything including money.  And now they have to come together to effectively manage their money – the marriage money dilemma.  

How do you take two different people, with two different attitudes about money, and bring them together to effectively manage money?  It is the love of money that is the root of all evil, not your spouse or potential spouse.  Below are some tips to help you and your spouse manage your money and avoid the marriage money dilemma.

Learn Your Partners Attitudes about Managing Money

You may be very compatible in other areas, but if not compatible financially, it will be much better for both of you to know up front. Once you know the others attitude about money, you can develop a plan for the two of you to work together.  Money differences in a marriage have real consequences, and you cannot assume that your partner’s stance on money issues will change after marriage. 

As you are planning and thinking about your finances, understand that trouble often ensues when people with different attitudes about money and other things live together and share their future and finances.  Find out what your partner or prospective partner’s attitude about money is.  Are they a spender or a saver, or do they respect money?  The answers to these questions will help you find out.  You must realize that both of your money attitudes were formed long ago, probably as children, because of the different situations and circumstances that you were both raised in.       

Managing Money Together to Plan for your Financial Future

When you are planning, or already married, think about and plan for your financial future as well.  Set financial goals that you mutually agree upon and work together toward those goals.  Using your differences as strengths and looking at your finances from both points of view, could give you insight into a better way of managing finances that you would not have seen apart. 

It’s Our Money in a Marriage Relationship

Once you get married you must realize that it is not your money anymore it’s our money and you must act accordingly.  Both partners’ money needs to be used to accomplish the goals both of you set and agree upon.  Additionally, you can probably do more with the money together in one pot than to have two smaller pots of money. 

Participate in Periodic Money Meetings To Manage Money Together

Communication in a marriage is critical and when managing money in a marriage it is doubly so.  Make time to sit down together and talk about your money.  Call them money meetings.  Have a money meeting, before each pay period.  You can create a spending plan for the pay period together and talk about how well you are doing.  You can also present financial goals and discuss future financial goals as well.     

These tips can help you and your spouse come together over money and begin to effectively manage your money together.  Using both you and your partner’s strengths, you together can conquer the world and your finances. 

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The Difference Between Marginal and Effective Tax Rates

You can’t just look at the marginal tax rate, which is a tax bracket rate applied to the last dollar you earn.  You need to also look at the effective tax rate, which is calculated by dividing the tax you owe by your taxable income amount. 

It’s that time of the year again.  That time where we settle-up with the IRS.  There is a lot to be said and asked about paying taxes and refunds.  For example, how can some pay so little in taxes and yet make millions?   How is that possible?  It’s all about marginal and effective tax rates.

The highest tax rate in the land at present is 37%.  How can someone that makes so much money pay less than that?  In some cases, the money is unearned income and therefore, taxed as a capital gain, which is a different rate than the earned income tax rate.  The top capital gains tax rate (for now) on long-term investments is 20 percent.

Closer Look at the Marginal and Effective Tax Rates

My point here is that you can’t just look at the marginal tax rate, which is a tax bracket rate applied to the last dollar you earn.  You need to also look at the effective tax rate. The marginal tax rate is calculated by dividing the tax you owe by your taxable income amount.  Because your earnings happen to fall into a certain tax bracket, does not mean that that’s the rate of tax you’ll pay.  Most of us likely pay a lower overall rate of tax than what our tax bracket indicates we should.  The reason for this is because our tax system is progressive, which is a good thing…maybe?

Marginal Tax Rate

Your marginal tax rate is the rate at which your last dollar and your next dollar of income are taxed.  It’s not the rate at which all your dollars are taxed.  It’s the maximum rate you pay on any of your dollars of taxable income based on tax brackets or rates.  For example, according to the rules at the time of this writing, the marginal tax rates for single filers are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. 

The marginal tax rate only deals with the specific tax on your income.  Other taxes such as Social Security taxes, self-employment taxes, alternative minimum taxes, and even penalty taxes on retirement plan distributions may be taxed.  Additionally, there are also credits that you may benefit from, such as the child tax credit, the dependent care credit, or education credits. 

Effective Tax Rate

These other taxes and credits will affect the marginal tax rate and help to determine your overall tax.  This is where the effective tax rate comes into play.  Your effective tax rate reveals the average rate of taxation for all your dollars.  It’s your total tax obligation, including your income tax and any other additional taxes and/or credits, divided by your total taxable income.

Therefore, the effective tax rate is the amount of tax owed when all other government tax offsets or payments are applied, divided by the tax rate.  Two people who have lots of tax offsets such as credits, other taxes, capital gains, or deductions may have a different effective tax rate than their marginal tax rates. 

After all, is said and done, your effective tax rate will likely be higher or lower than your marginal rate.  In taxes, one thing is constant…it depends.  So, when dealing with tax rates, be clear on which tax rate you are talking and working thru.  Contact me here if I can help you figure your tax rate.

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Concerning Your Net Worth Statement

After analyzing your net worth statement, you may have some concerns.  These concerns may include low assets, high liabilities, or negative net worth.  You will want to address these opportunities.  The net worth statement may also provide information that will lead to the development or revision of goals and objectives. 

In my last post, I talked about the net worth statement.  Also called a balance sheet, it is a tool you can use to see if you are making progress towards your goals and objectives.  You can read the last post by clicking here. 

In this post, I wanted to discuss some of the issues or opportunities concerning your net worth statement.  The net worth statement keeps you informed about your overall financial standing.  It lets you know if your net worth is decreasing or increasing.    

Valuing Assets and Labilities

First, a key to the net worth or balance sheet is determining good values for assets and liabilities.  And because you are using this net worth to compare to other years, you need the values to be as accurate as possible.  Therefore, you will want to use the same valuing tool.  For example, if you are valuing a car, and you use Kelley Blue Book.com one year, you may want to use Kelley Blue Book to value the car next year.  Otherwise, if we don’t get good values for assets and liabilities, what’s the use to comparing it to prior and future years. 

Addressing Net Worth Concerns

After analyzing your net worth statement, you may have some concerns.  These concerns may include low assets, high liabilities, or negative net worth.  You will want to address these opportunities.  The net worth statement may also provide information that will lead to the development or revision of goals and objectives.  For example, you may create an objective to change a negative net worth to positive net worth. 

Increasing Net Worth by Cutting Spending



As a financial counselor, I would help clients increase their net worth by showing them ways to increase their assets, decrease their liabilities, or both.  One way to increase assets is to cut back on spending.  This will allow for the building up of savings which will increase net worth.   Investing is another opportunity for some to increase assets.   

As you are addressing opportunities, keep in mind that that decreasing spending will have the greatest impact on net worth.  The reduction should focus on larger asset items such as housing and transportation. Reducing spending on smaller daily expenditures will not have the same impact.

The Effect of Increasing Income

Another way to increase net worth is to increase income.  If you can negotiate a pay raise, find part-time work, or sell your products or services, you can use the increase to build savings and pay down debts.

Paying Off Debt and New Worth

Finally, paying off debt can quickly increase net worth. Paying off high-interest credit card debt can have the most immediate impact on net worth. Freeing up cash by reducing spending or increasing income can be a great start toward a debt repayment plan.

All Net Worth is Not the Same

A person who does not currently have the financial resources to pay off all existing debt is considered insolvent. Their liabilities are more than their assets.  This situation is frequently found among students and recent college graduates who have incurred student loans and have not yet built-up assets to offset debts.  Considering where an individual or family is in their financial life cycle, insolvency or a negative net could be expected.  A negative net worth due to student loans or the purchase of a home is not the same as a negative net worth due to credit card bills or the accumulation of lifestyle assets or assets that don’t produce disposable income. 

Finial Thoughts

As we start a new year, you may want to create a net worth statement to see where you stand financially.  Once you have an idea of your net worth, you can develop objectives and goals to improve your financial situation.  However, you can always commit to spending less than you make and increase your rate of saving in this new year.  This will always move your finances forward in the new year.

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Build Wealth with Compound Interest

Compound interest will either work for you or against you.  To make it work for you, grow the difference between your income and expenses as much as you can.

Today I want to talk about something a little different. When I started this blog, it wasn’t about compound interest, it was all about the spending plan and creating a plan to spend your money.  I believe that using a spending plan may be the most important thing you can do to manage your money better.  However, another important but not fully understood concept in money management is building wealth with compound interest.

What is Compound Interest? 

Compound interest is the interest calculated based on both the initial principal and the accumulated interest from previous periods on a loan or deposit.  According to Investopedia, it goes back to 17th-century Italy.  To understand better, think of it as interest on interest.  And it grows faster than simple interest, which is interest on just the principle. 

What’s the Big Deal

Compound interest is what gives the average person like you and I a fighting chance to build wealth.  Someone once said that those who understand interest earn it, and those who do not understand interest pay it.  There are two caveats however:

•          It takes time to realize the gain.  There’s no magical investment that’s guaranteed to double your money. One or two years is too short a timeframe to experience its extreme power.  Therefore, you need to be patient, but the results are worth the time. 

•          You need to continue to invest, even when everyone else thinks it crazy to do so because it’s the way to get Compound interest working for you.  

And even with those limitations, it’s still the most powerful weapon to build wealth.

Get Compound Interest Working for You 

It will either work for you or against you.  To make it work for you, grow the difference between your income and expenses as much as you can and then invest.  This will allow you to realize more because you will have more to invest.  Making your money work for you is all about having compound interest on your side. 

2022 will be a year of work, rebuilding, and hope.  And I will continue to bring financial literacy information like the Build Wealth with Compound Interest article above to you.  In my last blog post for 2021, let me wish loyal readers and everyone a happy, joyous, and prosperous new year. 

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How To Avoid Making Mistakes Managing Money

The way to not make mistakes like this is to have a plan for money coming in and going out, a spending plan.  And then strategies to help you follow the spending plan. 

I do not tell lots of stories on the blog, but I am going to tell a little story today.  And my reason for telling this story is that I believe it can help readers avoid mistakes managing money. 

We All Making Mistakes Managing Money 

Prior clients of mine recently made a huge, several thousand dollars mistake managing their money.  Without giving you lots of details, this husband and wife will be paying for this mistake for a little while.  As I discussed the issue with them, we eventually figured out what happened.  What it boils down to is not managing money well, because they had no clue where they were spending it.  I see this with clients often, where they are spending money and not keeping track of where they are spending it and no plan.   

As a financial coach, I believe knowing where your money is going or where you are spending your money, is critical and helps people manage money better.  That is what I teach my clients and others.  And knowing where your money is going helps you to cut and prioritize your spending when you see fit.   

The clients that I am speaking of will recover, but I tell this story to hopefully, stop others from making similar mistakes with money.   The way to not make mistakes like this is to have a plan for money coming in and going out, a spending plan.  And then strategies to help you follow the spending plan. 

A Spending Plan Will Help You Avoid Making Mistakes Managing Money

Having a spending plan to help you manage your money is of paramount importance.  With all the competing demands for your money, if you do not create a spending plan and then put that plan into practice, the competing demands will spend your money for you. 

And Now What

As I said earlier, I will work with them, and they will regroup and recover.  One thing is for sure, my clients are more convinced and fully persuaded that a spending plan is crucial.  And then following the spending plan is also very important.  What is the point in having this tool, that can start you on your path to financial freedom, and not follow it?

I am a financial coach.  Contact name here.  I can help you create and stick to your spending plan.

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The Zero-Based Spending Plan

Your financial future is reflected in your spending plan, as it designates where you want to go.  I believe that following a spending plan is essential to getting your financial life in order, and it’s the starting place for your spending and saving.  Your financial success is essentially a matter of choice, not a matter of chance. 

There are many spending plan strategies and methods. The zero-based spending plan method is the one I use and teach. Don’t let the zero scare you, it’s not the temperature, it’s to get your spending plan to equal $0. Allow me to explain.

What is a Zero-Based Spending Plan

A zero-based spending plan is a type of spending plan where, you allocate every dollar of your income to your expenses, debt payments, and savings.  I like to explain it as telling all your income where to go and what to do.  The zero-based spending plan gives every dollar you take home a specific function and leaves you with no unused cash at the end of the period…$0.

Spending Plan Categories

You do this by assigning income to your spending plan expense categories until every dollar is accounted for.  The categories of food, housing, utilities, and transportation are pretty much decided for you as you go about living your life.  Some uncommon categories would include additional bills, occasional expenses, personal money, and miscellaneous expenses. 

A Zero-Based Spending Plan is Detailed

The zero-based spending plan method forces you to create detailed and well-developed spending categories.  When you are planning to spend or allocate all of your income, there is no room for error. This is why I coach clients to track spending, in some way, before they create the actual spending plan.  Your past spending will create your spending plan categories.  And all of this may take more time upfront, but in the end, it gets easier and less time-consuming, and well worth the effort. 

Getting to $0

Any leftover money should go where you want it to go such as savings, retirement, emergency fund.  I like this method because it gives you the flexibility to put money into categories that are priorities. Unlike other methods that tell you a specific percentage you should spend in a category.  Additionally, you could use the envelope method in this way as well.  No money leftover means every dollar is spent or saved with a specific purpose. It doesn’t mean that you’ll be spending recklessly.

Each spending plan period, start with your income and work to zero.  Additionally, you have a chance to change and adjust your spending plan and expenses.  You can design this spending plan to fit your specific income, needs, and wants. 

Final Thoughts

Your financial future is reflected in your spending plan, as it designates where you want to go.  I believe following a spending plan is essential to getting your financial life in order and a starting place for your spending and saving.  Financial success is essentially a matter of choice, not a matter of chance.  And a spending plan is where you make and implement your choice.  Whether the zero-sum budget, the envelope method, or some other spending plan, the objective is to take control of your finances and begin to manage money better.

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Reaching Financial Goals in 2022

Did you know that only 5% of the population has clearly defined written goals?  According to a recent study, people who write their goals are more successful at achieving them, whereas those who did not write goals down were only moderately successful.  The value of writing down goals, cannot be understated.   

Will you be reaching for financial goals in 2022?  As the end of the year approaches, lots of people are talking about how to reach goals.  Goals are good as they provide direction and a path to follow to achieve an objective.  

What are Goals

According to Dictioanary.com, goals are the result or achievement toward which effort is directed; aim; end.  Short-term goals will activate soon; a day, week, possibly a few months.  Long-term goals are achieved over a longer period; semester, one year, first quarter, five years.   

Financial goals help you move towards your objectives with money.  For example, if your objective is to save up enough money for a mini emergency fund ($1000), your goal might be to trim some expenses and save a certain dollar amount weekly or monthly until you reach the $1000 goal. 

Reaching Financial Golas in 2022: Four Ways Goals help you Meet your Objectives

As you are developing financial goals for next year, keep in mind that goals affect your outcome.  They help you meet your end objective in four ways.

  1. Goals give you a choice in the matter.  With a goal, now you must choose whether I go out to eat for lunch or bring my lunch to work.  Goals focus your attention towards your objective and away from distractions.
  2. When you have goals in place to meet objectives, you become energized about meeting your goals and you increase the effort toward them.  A goal will induce greater effort toward saving money than no goal at all.  No one wants to fail at a goal.        
  3. When you have goals your ability to work through setbacks increases.  So, because of an unexpected expense, you are not able to save as much as you wanted to this month.  Goals will help you to work through this set back, keep pursuing the goal, and keep you on track to start saving, again in the next month.
  4. Goals have a cognitive quality about them.  They can lead to individuals developing and changing the behavior that they want to change.  The goal of saving money will help you think about saving money and help develop a saving behavior. 

SMART Goals

 When you set your goals use the S.M.A.R.T. test.  S.M.A.R.T. goals are:

  1. Specific – detailed and focused and specify the result.

Example:  I want to save $1000 so I can have a beginner emergency fund, the final objective.

  • Measurable – quantifiable. There must be a method of comparison that indicates when the goal is reached.

Example:  I want to save $100 per month to reach my goal of $1000 saved.    

  • Action-Oriented – tells what is to be done to reach the goal.  Action Verb tells the type of activity performed.  You want to keep the goal in front of you.  Write the goal down and keep a copy in your purse or wallet.  Put a copy of your goal on the mirror in your bathroom; keep it in front of you as a reminder.    

Example:  save 100 dollars per month until I reach $1000. 

  • Realistic – practical, achievable, and possible.  Goals must motivate individuals to improve and reach attainable ends (not too easy or too hard).

Example:   I plan to save $20 per week. 

  • Time constrained – scheduled or regulated by time.

Example:  Save $1000 by the end of the year. 

When your goals meet the S.M.A.R.T. test, they will be better goals and more attainable.

Reaching Financial Goals in 2022: Did You Know

Did you know that only 5% of the population has clearly defined written goals? According to a recent study, people who write their goals are more successful at achieving them, whereas those who did not write goals down were only moderately successful.  The value of writing down goals, cannot be understated.   

You can begin reaching financial goals in 2022 by setting objectives for what you want to achieve with your finances, and then develop short-term and long-term goals. Celebrate the achievement of each goal, and by all means, stay focused.  I am a financial coach and would love to help you set some SMART financial goals.  Contact me if you are ready to be coached.    

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Help to Manage your Money in the New Year

Some of us get so caught up in what we are not, that we miss what can be and can do.  It allows you the chance to move your life forward and your relationship forward and move your money forward.  We can’t stay stuck on, I should be here or, I need to be there in your business, your career, your relationships, and your money.  You can’t move forward until you start looking forward, and you can’t look forward until you acknowledge that you are where you are.

As the holidays move forward, and we look toward a new year, many of us will start looking for things and help us do better.  And some will look for help to manage money in the new year. 

You Are Where You Are Supposed to Be

With all the other strategies and techniques, consider this.  Before you look at improving your finances in the new year, conclude that you are where you should be. We have got to settle on the fact that we are where we are supposed to be. Despite all of the distractions and disappointments, the ups and downs, the triumphs, and failures.  You are supposed to be exactly where you are. With your money, your relationships, your work, and your business as well.  

Settle Your Mind and Then Move Forward

This is meant to encourage you because once you settle in your mind, it allows you the opportunity to move forward.  Some of us get so caught up in what we are not, that we miss what can be, can do and what we are.  It allows you the chance to move your life forward and your relationship forward and move your money forward.  We can’t stay stuck on, I should be here or, I need to be there in your business, your career, your relationships, and your money.  You can’t move forward until you start looking forward, and you can’t look forward until you acknowledge that you are where you are.  It gives you the peace, space and fresh mind set to start looking forward. 

Help To Manage Your Money in The New Year

As a financial coach, I would love to provide you with help to manage your money in the new year and move your financial situation forward.  Together we will implement financial strategies or pre-established action plans to address your specific situation.  We will start with an assessment and then move forward.  Contact me here if you are ready for a financial coach in 2022 and be encouraged.

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Money is Good for Three Things

My point in all of that is to say that it’s okay to spend your money. It’s your money, you earned it, and you should spend it but, you should also spend it with a plan in mind.  My goal is to help you create a spending plan to help you spend your money within some parameters. 

This holiday season as you, are shopping, keep in mind the three things money is good for.  If I were to ask you what three things money was good for what would you say?When I am teaching how to create a winning spending plan, I always ask this question and get a lot of different answers. 

Let me ask it in another way. 

The things you do with money, can be put into three categories, what are they?

When I ask this question, I always get similar answers.  Answers like It’s good for paying bills, buying stuff, saving, investing, and going shopping. 

And then I would say something to the effect of okay, we got spending and saving.  What is the third thing?  I put investing into the saving category. 

It’s interesting because at this point most of my students go blank.  Then
I ask again and say ok money is good for three things, spending, saving,
and…?  What are the three things we all do with money?

Most of the time I get no response and ask the class to think about and move forward with the class.

My point in all of that is to say that it’s okay to spend your money. It’s yours, you earned it, and you should spend it, but you should also spend it with a plan in mind.  My goal is to help you create a spending plan to help you spend within some parameters. 

What Are The Three Things?

Simply put, money is good for three things: spending, saving, and giving.  Interestingly when we are talking money, we forget about giving.  That is a discussion for another day. 

I am a Financial Coach, and I would like to help you navigate your finances and create a winning spending plan for you and your family.  Contact me
here, and we will do an assessment and get started improving your finances one GoldneRule at a time.  Take care.

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Take the Stress Out of Creating a Spending Plan

However, if you’re among the half of Americans who don’t use a spending plan, I am not sure this is for you, but below are some reasons to create a winning spending plan for you and your family. 

Creating a spending plan does not have to be stressful or painful.  It can be an opportunity to be in control of your money and tell it where you want it to go. 

How would you feel if two or three years from now you were debt-free, living in your dream home, and planning your next vacation?   All because you started planning to spend your money by creating a spending plan.     

You are the master of your spending plan, and if your spending plan isn’t working for you, trash it and try again.  You can also work with a coach to reduce the stress and gain confidence that your money is working for you.

However, if you’re among the half of Americans who don’t use a spending plan, I am not sure this is for you, but below are some reasons to create a winning spending plan for you and your family. 

A Spending Plan Sets Limits for your Spending.  A spending planhelps individuals and families live within their means.  The goal of a spending plan is to help people live within their means.  A spending plan sets category spending limits and overall spending during a period.  The limits are based on when you receive income.  Individuals who follow a spending plan are better equipped to avoid overspending.

Remember that a spending plan is just an estimate of how you are going to spend your money.  To be successful, you need to track your spending and be prepared to adjust. A flexible spending plan is easier to follow. 

A Spending Plan Helps You Live Within Your Means.  A spending plan helps you with the discipline to live within your means.  A spending plan goes beyond debits and credits and helps create alignment between you and your money.   It also helps set financial goals and attach numbers to your goals, so you can move forward with accomplishing them.

A Spending Plan Helps You Separate Needs from Wants and Save Money.  To create a winning spending plan, you must separate needs from the wants.  Consider what is needed every day and what is wanted and create your plan accordingly.   Also, a good spending plan will allow you to save some money each period.   

Spending plan or no Spending plan, I believe that we all want to live our best lives and that includes in the financial area.  Having an awareness of how much you bring home and where your money is going, a spending plan, you will be on your way to a better financial future.  Contact me if I can help you create a winning spending plan. Be encouraged.

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Holiday Spending Plan Tips

The holidays are a time to get together with friends and family and celebrate.  It can also be a stressful period when it comes to personal finances.  It’s the most wonderful time of the year, and it may not be the most wonderful time for your bank account.  Holiday retail sales are slated to increase 7% this year, and one in three people say they plan to spend more this year than in years prior.  

First, I want to wish everyone a wonderful, stress-free, holiday season.  May this holiday season bring you more joy and peace than any other. 

The holidays are a time to get together with friends and family and celebrate.  It can also be a stressful period when it comes to personal finances.  It’s the most wonderful time of the year, and it may not be the most wonderful time for your bank account.  Holiday retail sales are slated to increase 7% this year, and one in three people say they plan to spend more this year than in years prior.  

Below are a few tips to keep your holiday spending plan wonderful and on track. 

You Need A Spending Plan

First, decide on a spending plan for your holiday expenses, including gifts and gift-related items, and stick to it.  Also, include non-gift items in your spending plan, like entertainment and travel.  If possible, use last year’s spending as a guide to create your spending plan for this year. 

Make a list and Keep It With You

For holiday gifts, make a list and set spending limits for each person.  A list will keep you on task and help you not get caught up in the pageantry of the season.  Make sure to keep your list with you as you are shopping during the holiday season.  Keeping your list on your cell phone is a great way to take your list with you whenever you are holiday shopping.  

It’s very easy to get caught up in the emotions of the season and buy more than you planned.  A list can help go a long way in keeping your spending in check and preventing a large after-the-holiday bill.

Be Aware of Credit Card Spending

Credit cards can make it easy to overspend.  A large portion of a credit card company’s profits is generated by holiday spending and overspending. 

A great method for holiday spending is the envelope system.   Basically, in the envelope system, you develop a spending plan and then distribute your cash into different envelopes with the names of your gift recipients or spending categories on the envelopes.  When the envelope is empty, it’s empty, and no more spending for that person or category. 

Shop Smart

Shop around, whether online or in-person because prices can vary drastically and allow yourself time to compare prices and offers before Christmas comes.   Think of personalized or homemade gifts that people will use and cherish.  Keep in mind that it is the thought that counts and be creative with your gift-giving.   If shopping online, certain browser extensions like Honey, Rakuten, and Capital One Shopping will do the work for you.

The holidays should be a time of celebrating with family and friends, but too often the season is overshadowed by financial stress. With advanced preparation and setting realistic spending plan goals, the holiday season can be a cheerful time.

We wish the readers of the GoldenRule$ blog a happy, joyous, and peaceful stress-free holiday season and a prosperous New Year!

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Healthy Financial Behaviors

As you can see, it makes a big difference to pay more than just the minimum due, in both the time it takes to pay off debt as well as how much you end up paying.  Of course, the optimum plan would be to pay the balance in full each month and avoid paying interest altogether, but the most important thing is to make sure your payments fit with your spending plan.  

Last month I posted an article titled “How Healthy is Your Financial Behavior?”.  In it, I discussed healthy financial behaviors and even gave you an assignment.  This month we want to talk more about healthy financial behaviors and what you can do or what healthy financial behavior you can employ to improve your financial health. 

Several financial behaviors may be draining your spending plan without you even realizing it, and leaks here and there can add up to spending money on things you did not intend.  Below are some financial behaviors you should consider.  Changing these behaviors may help you tighten up your spending plan.

When making payments on credit cards and loans, try to pay more than the minimum.  Paying more than the minimum can save you from incurring a significant amount of debt in the form of interest.  Here is an example:  If you have a credit card with a $1,000 balance, an 18% interest rate, and you pay only the minimum payments each month it would take almost three years to pay off the balance.  The total of payments would be about $1,304, meaning $304 is interest.    

On the other hand, using the same balance, interest rate, and minimum amount due, let’s say you pay more than the minimum due each month.  If you were to pay an additional $60 each month, or a total of $100, it would take just 1 year to pay off the balance, and the interest paid is reduced to $103, a significant saving. 

As you can see, it makes a big difference to pay more than just the minimum due, in both the time it takes to pay off debt as well as how much you end up paying.  Of course, the optimum plan would be to pay the balance in full each month and avoid paying interest altogether, but the most important thing is to make sure your payments fit with your spending plan.  

Pay your bills on time.  First, late fees can add up, so consider setting up automatic payments for your monthly bills, either through the company billing you or through your bank.  Some companies even offer a small discount for enrolling in automatic payments and paperless billing, so be sure to check. 

Another benefit of paying bills on time is that accounts, such as loans and credit cards, are reported to the credit bureaus and are reflected in your credit score.   Thirty-five percent of your credit score is based on how you pay your bills.  Therefore, on-time payments will help increase or maintain your score, while late payments will lower your score.

Read the fine print and look for fees or charges for certain actions or criteria.  Banks, credit cards, and loan companies will charge fees for certain transactions or services, so be sure to read your statements carefully and know the terms and conditions.  Banks may charge a fee for that “free” checking account and 0% credit cards aren’t always what they seem.  For example, while the idea of transferring a credit card balance from one that charges interest to an interest-free card be sure to look for balance-transfer fees or other charges that must be paid up-front, as they may outweigh the savings, you’d receive from a 0% interest offer.

Plan your shopping trips before you head to the store.  Take note of what you already have and make a list of what you need.  Do not shop for things you do not need.   How many times have you walked into a store for one item and you end up walking out with a full cart of merchandise totaling $100, or $200?  You did not go shopping for these items but once you saw them you had to have them.  Did you think about how this would affect your spending plan? 

Making a list beforehand, and sticking to it, will do two things.  First, it will help you from going over your spending plan category.  And second, it will help you from making unnecessary purchases.

These are just a few behaviors that can help you financially.  Can you add any?  Comment below and let me know what you think.     

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Consistency in Managing Finances

Consistency and money management, like all things, begins in the mind with thought.  All of our beliefs, feelings, and behaviors begin in thought.  You can create neurological pathways that reinforce the notion that you are capable of managing money well.  And practicing these thoughts consistently builds the pathways.  Each thought has the capacity to help us follow through with the appropriate behavioral response automatically.

Consistent thoughts are, naturally followed by consistent behaviors that are conducive to managing anything, including money and finances.  For example, just because you have created a spending plan or budget does not mean that you are set, and your finances magically improve. 

Now comes the part where you have to stick to that spending plan. 

Being consistent in doing the things you need to do to manage your money well will get you to the financial freedom you desire.  It is already difficult enough managing money and all the competing demands that money commands, but to consistently do the things to manage that money well, takes more effort, which makes it more challenging.  Let’s face it, money is time. 

However, spending time managing money well is time well spent.   

Think of it this way, it is quite difficult for businesspeople and financial statement users to make projections and plan when the data, is not organized and therefore measured in the same way over time.   A lack of consistency over time can distort the financial trend and create extreme uncertainty in evaluating a company and its performance. 

How about this, let’s say we have an accounting entity that is not using the same accounting procedures from period to period.  Would you make financial projections and financial decisions about the business with unequal financial data?  Not me. 

Apples are not oranges – consistency.

And Your finances are the same way.  The lack of consistency in managing your finances can distort where you are financially and be unproductive.  Constituency in your financial management practices and behaviors will allow you to plan, compare, and make good financial decisions. 

What is Consistency? 

According to Dictionary.com, consistency is steadfast adherence to the same principles, course, or form as consistency in a particular pattern of behavior.  So, consistency or staying the course is a critical aspect of success, no matter what the endeavor.  Managing finances well is not a one-time thing; it is like a job and commands consistency.  It’s not a project that has a beginning, middle, and end. It is an ongoing way of being.

Consistent Thought

Developing the right mindset for any endeavor requires consistent thought.  Managing money well is a way of being that stems from developed thought.  Each time you have a thought, neurological pathways are reinforced.  New thoughts lead to new pathways.  Which leads to strengthening pathways and a habit is formed. 

Consistency and money management, like all things, begins in the mind with thought.  All of our beliefs, feelings, and behaviors begin in thought.  You can create neurological pathways that reinforce the notion that you are capable of managing money well.  And practicing these thoughts consistently builds the pathways.  Each thought has the capacity to help us follow through with the appropriate behavioral response automatically.

Though this process may appear to be quite easy, it is important to note that some of the thoughts may not be supported by your underlying belief system.  Therefore it will take some time, and practice to build the neurological pathways for the things you want to achieve.

You are no different from any person that manages money well.  Managing money well can be a matter of perception.  Take a few moments each day and:

  • Learn, embrace, and practice good money management
  • Believe that you can succeed
  • Be grateful
  • Look at your goals often- keep them in front of you

With the use of other tools such as a spending plan, gradually, the process of managing money well becomes second nature, allowing you to achieve the goals that you visualize every day.  Your thought processes naturally lead to behavioral follow-through that is consistent with your ideas.  Focus on what you can accomplish, and you will begin to improve, fundamentally and consistently, your finances. 

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You Need a Fund for Emergencies

An emergency fund or what some call a contingency fund allows you to stick to a spending plan without having to change and interrupt your budget to meet unexpected costs and expenses.  You can plan better and manage your finances knowing you can cover emergency expenses as they arise. 

Having emergency savings is extremely important in today’s economic environment.  It may be the most significant difference between those who manage to stay afloat and those who are sinking into financial debt.  Emergency savings of 3 to 6 months of expenses allows you to meet unexpected financial challenges such as:

•           Car repairs

•           Medical expenses

•           Home repairs

•           Other emergency expenses

Having an emergency fund also allows you to plan to spend all your money without worrying about taking care of emergencies that arise.  Below are more emergency fund tips. 

Emergency Funds give you Peace of Mind

The emergency fund not only allows you to cover these expenses, but it gives you the peace of mind that you are prepared for financial emergencies. 

Not having an emergency savings fund is a reason many individuals borrow money at high interest-rates through alternative and predatory lenders.

An emergency fund or what some call a contingency fund allows you to stick to a spending plan without having to change and interrupt your budget to meet unexpected costs and expenses.  You can plan better and manage your finances knowing you can cover emergency expenses as they arise. 

Keep Emergency Funds Where you can get to Them

You will want to keep your emergency savings in an account that you will have ease in the ability to access as needed.  This is called liquidity or the funds being liquid.

 How easy is it for you to get access to the money when you need them? 

It is best to keep emergency savings in a bank or credit union savings account so I can get to it when I need it.  These types of accounts offer easier access to your money than certificates of deposit, U.S. Savings Bonds, or mutual funds.  Keeping your emergency fund separate from checking accounts makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses.

Get the Family Involved in Saving for the Emergency Fund

You may think that it is not so easy to save $500 to $1000 for emergencies.  One way to make it easier is to get the entire family involved in building the emergency fund.  It may be easier if you involve your whole family in meeting the challenge.  Explain the importance of emergency savings to your family and get them to help by cutting expenses on the power, food, entertainment, and more.

Make your emergency savings fund your family financial goal and plan how the family will meet the goal.  Keep the family updated and when you meet the goal be sure to celebrate maybe with a family fun night. 

Having emergency savings is essential in today’s current economic climate.  Having emergency savings will give you peace of mind about your finances.  Set goals and celebrate when you meet the emergency savings goal.  You need an emergency fund, and with some work and a plan, you can have an emergency fund for emergency expenses and peace of mind over your finances.

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Achieving Financial Success

To some, financial success is spending less than they make.  This is a key to any financial plan.  The alternative is spending more than you make is a recipe for disaster.  Spending less than you make will allow for savings so that you can purchase assets.  

Financial success is attainable for everyone because it means different things to different people.  Your thought or views on financial success are probably different than mine and vice versa. 

Financial success for one may be to provide an inheritance to his children, and another person may see the vacation house on the lake as financial success.  However, you determine financial success, below are some tips or foundational tools to help you achieve your view of financial success.

Have a Plan

Get organized and develop a plan to get you to where you want to go.  In doing that, determine what your financial situation is.  Often, you can know where you are going until you know where you are.  So where are you?  What is your income?  Who do you owe, how much do you owe, and when is the payment due?  These questions are the types of information you will need to know.   

Once you know where you are, you can develop a plan to develop short-term and long-term goals and ways to meet them. 

Spend Less

To some, financial success is spending less than they make.  This is a key to any financial plan.  The alternative is spending more than you make is a recipe for disaster.  Spending less than you make will allow for savings so that you can purchase assets.  

And it is assets that will help you build your wealth and financial success.

Prepare for Expected and Unexpected Events

Expected events would include things like retirement, holidays, and kid’s college.  How will you plan for these events?  How much will you need for college or retirement?  Prepare for these events to be successful for you and your family.          

Unexpected events include car repairs, a job loss, or maybe unexpected medical expenses.  How will you handle these events?  An emergency fund of six to twelve months of expenses is a good place to start and could be seen by some as a financial success. 

Preparing for expected and unexpected events will save a lot of headaches later. 

A Healthy Credit Report

Many people see a healthy credit report as financial success.  To keep your credit report healthy, you need to do two things.  First, pay your bills on time. 

Thirty-five percent of your credit score is based on how well you pay your bills on time. 

The second thing you need to do is get a free copy of your credit report at annualcreditreport.com.  Getting a copy of your free credit report, and looking over it, may alert you to possible identity fraud.    

Understanding Taxes

Many people do not take advantage of tax breaks that are available to them.  For example, the Internal Revenue Service conducts a program called VITA.  VITA stands for Volunteer Income Tax Assistance.  Volunteers are trained to do taxes for free for low and limited-income individuals and families. 

Additionally, credits such as the earned income tax credit, education credits, and retirement saving contributions, can increase your income and help you reach your financial goals.         

Give Back

Money is used to do three things.  That is, spend or buy things, saving and investing, and giving.  

So, to complete your success, give back. 

Once you achieve financial success, give back to the local elementary school, food bank, or United Way.  Give back to the community in some way.  For me, giving in a much greater way than I am currently able, would be the ultimate success. 

What constitutes success for you.  Comment below, I would love to hear from you. 

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Avoiding Bad Financial Habits

weekly, and monthly basis. Weekly, add up all of those receipts for gas, snacks, soft drinks, and lunch at your favorite restaurant, and coffee.  And see how quickly it all adds up when you do not know how much you are spending every day.  Eliminate this bad habit and put yourself on a daily spending limit and stick to it.

We all have habits. Some are good and some are not so good.  Whether it’s cursing, biting fingernails, or something else, we all have things we do consistently that we should not, bad habits.  There are also bad or negative financial habits.  Things that we should not do that hinder us financially. 

Instead of simply accepting your financial negative habit, think about how that habit may affect your financial future.  Living the life that you want to, and then do something about it. 

When it comes to making the most of managing your money well, the following are some tips to help you recognize some of those negative financial habits and control them so they do not take a toll on your wallet. 

Not Living Within Your Means

Living within your means or spending what you do not have, is a negative habit and is critical to managing your finances. 

With so many temptations from new fashion every season to sales every other day at your favorite store, it is easy to fall into the habit of constantly buying new things.  Become a financially disciplined person and learn how to resist the urge, the consistent desire, to spend what you don’t have on what do not need.  

Start by creating a spending plan.  

Not having an Emergency Fund in Place

Not having an emergency fund for unexpected expenses is a serious negative habit.   Whether your car needs unexpected repair, your air conditioner breaks, or you get laid off, the unexpected financial event can be a real inconvenience.  

Saving regularly for an emergency or rainy day fund of 6 to 12 months of expenses is a must so that you will be covered when the unexpected does happen.

Be Aware of Your Money Attitude

What you say to yourself and others about your finances is a bad habit and can have a big impact on how you interact with money. 

Watch out for statements like, “I don’t have any money to budget,” “I will never make any money,” “Shopping is my therapy,” and “But, I’ve always let my spouse take care of the money.”  

These excuses, negative thinking, and talk will keep you from feeling confident about managing your finances.

Blind Spending

It’s important to not be oblivious to how much money you spend on a daily, weekly, and monthly basis. Weekly, add up all of those receipts for gas, snacks, soft drinks, and lunch at your favorite restaurant, and coffee.  And see how quickly it all adds up when you do not know how much you are spending every day.  Eliminate this bad habit and put yourself on a daily spending limit and stick to it.

Maxed Credit Cards

When used correctly, credit cards are an effective and useful tool in helping you to make purchases and build a good credit history.  However, when they are not, they are a bad habit waiting to happen.

The key is paying off your balance every month.  Be wary of spending up to your credit limit and just paying off the minimum amount each month.

We all have good and bad habits.  Do not just accept your negative bad financial habits but think about how that habit is affecting you and your finances.  Deal with that bad habit and live the financial life that you want to.  What other bad or negative financial habits can you think of?  Comment below, I would love to hear from you.  

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How to Estimate your Spending

Your awareness of your money and your behavior with money is sharpened, allowing you to make changes to improve your financial situation.  So now, instead of thinking of a budget as a restriction, think of it as an estimate of how you will spend your money for the next period, week, biweekly, monthly.  And the better your spending estimate, the better your budget, and hopefully, you will be more likely to stick to it. 

When you hear or read the word budget, what do you think?  I think for most of us, we think about being restricted – a negative connotation.  That is why I like to use or call it a spending plan because, in budgeting, you are planning to spend your money. 

Spending plans are a funny animal; you may not get them right the first time.  And just when you think you got it about right, some life situation or circumstance changes, and the spending plan must be adjusted. 

When you think about it, a spending plan is just an estimate or plan of how you are going to spend your money, and you must and need to be prepared to change it when needed.  Two interesting things about estimates:

  • Estimates change – Estimates change based on circumstances.  For example, let’s say you had an emergency that you did not budget for, maybe your AC went out, and you will now have to change your budget. 
  • Estimates can be better – You can have good estimates, and then you can have a better estimate. 

For example, let’s say you estimate that you will spend three hundred dollars at the grocery this month.  And three weeks into the month, you realize that you have spent four hundred dollars on groceries.  The estimate was probably not that good.  On the other hand, let’s say that you tracked your grocery spending for three average months, and it looked something like this:

Month one            $300

Month two            $400               

Month three          $350

                             $1050.00

$1050.00 / 3= $350.00 grocery estimate

Now you have three months of grocery spending history that you can average together, $350 per month, and now have a better spending estimate for your groceries for the next average month. 

Now, just because you have a better estimate does not mean that it still will not have to be changed at some time because a situation comes up or a circumstance change.  However, what you do have is a better opportunity to stick to a spending plan estimate because it is a better estimate built on past spending history.  

It is the tracking of spending that allows for you to have a better spending plan estimate. 

So how do you go about tracking your spending? 

Get into the habit of consistently recording your expenses in some way. 

The most important thing is to use some type of log to record the expense. Whatever it is that you use, a log, a piece of paper, some type of register, or a spreadsheet, every time you spend money, you should record it in the log. 

Tracking your spending helps to make your money, and you’re spending more real.  You will begin to see your money as a tool to help you achieve your goals and that will give you a sense of control over your money. 

Your awareness of your money and your behavior with money is sharpened, allowing you to make changes to improve your financial situation.  So now, instead of thinking of a budget as a restriction, think of it as an estimate of how you will spend your money for the next period, week, biweekly, monthly.  And the better your spending estimate, the better your budget, and hopefully, you will be more likely to stick to it.  What other tips can you think of to help stick to a spending plan?  Comment below and let us know. 

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When Finances Become a Source of Stress

When stress is getting you down, take a moment to reflect on all the things you appreciate in your life, including your positive qualities and gifts. This simple strategy of gratefulness can help you keep things in perspective.

Most of us have financial obligations or expenses that we must take care of.  Some of those include rent or a mortgage, maybe a car payment, credit card payments, and other needs such as clothing, and recreation.  Sometimes these obligations can become stressful and this stress can lead to anxiety, depression, and other physical and behavioral problems.  It’s important to take care of financial stress before it takes a toll on you and your family.

What Causes Financial Stress

Certain situations and circumstances can shake up finances and can lead to a major change in our finances and thus financial stress. 

For example, finances may be affected by a job loss or maybe a bad year of sales if you work on a commission.  Other major changes include a new baby, separation, divorce, or the death of a family member. 

However, financial stress can affect a family at any time and therefore, you must be able to recognize and manage it. 

Learn to Recognize

How do you recognize financial stress?  You have to learn the signs and signals. Your true sources of stress are not always obvious, and it’s all too easy to overlook your stress-inducing thoughts, feelings, and behaviors. 

For example, you may know that you’re constantly worried about being able to pay bills on time.  However, maybe it’s your lack of organization, rather than not having the money to pay the bills when they are due, that leads to stress.  Hence the importance to sit down and work with your money and bills consistently.   

Some signs of financial stress include: 

•Frequent worry or arguments about money

•Spending more than you make and using credit cards to make everyday purchases

•Only making minimum payments or making payments late

•Feeling overwhelmed by debt

If you are experiencing any of these, it could mean that you are experiencing financial stress and it is time to start managing that stress. 

Manage Financial Stress

Managing financial stress begins with identifying the sources of stress in your life. This isn’t as easy as it sounds.  

The ultimate goal is a balanced life, with time for family and work, relationships, relaxation, and fun – plus the resilience to hold up under pressure and meet challenges head-on. 

Talk about the situation and explain to family and children how things may and how they can help turn things around.  Keep up routines and keep life as normal as possible.  So, as a family, eat together and do other things together whenever possible.  Focus on the positive and know that your situation is temporary, and you can make it better. 

When stress is getting you down, take a moment to reflect on all the things you appreciate in your life, including your positive qualities and gifts. This simple strategy of greatfulness can help you keep things in perspective.

 Keep in mind that your children learn how to cope with stress by watching you. 

Create a household spending plan or budget.  This is the first step toward making it better and regaining control of your finances.  Track your expenses and know where every dollar is going.  In tracking expenses, you will begin to see ways to reduce expenses and save money.      

If your financial situation is stressing you out, recognize the causes of stress and begin to manage that stress.  Take charge of your finances and take charge of the stress. 

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How Healthy is Your Financial Behavior?

For example, daily coffee at $4.00 a day at 5 days a week, 52 weeks a year is $1040.   Suppose you save that money, what could you do with $1040?  A mini emergency fund perhaps.  

Financial behavior is the human behavior that is relevant to money management. It is how you manage money and can be healthy or unhealthy.  

If you do not have one, creating a spending plan or budget is good financial behavior that can lead to better financial management. 

The unhealthy can help us lose track of our spending plan. Avoiding unhealthy financial behaviors can reduce financial stress and help you to win with your finances.   Below are some unhealthy financial behaviors to avoid: 

Carrying a balance on a credit card.  Carrying a balance on a credit card is unhealthy financial behavior.  A balance on your credit card can cost you significantly in interest payments, as well as affect your credit score. 

I know this blog is about your spending plan and not credit, per se, and a little off-topic.  However, credit is nonetheless important in the family finance discussion.  We may talk about credit more in the coming months.   

Thirty percent of your credit score is based on the balances you carry, so it is important to pay the balance down by either paying it in full or paying more than the minimum due each month. 

Additionally, this will minimize the expense of using credit. 

If you are paying your balance in full each month, focus on making sure you’re not missing out on all the benefits your card offers. 

If your credit card company charges annual fees, make sure the benefits (rewards points, cashback options, gas rewards, or frequent flier miles, for example) outweigh the cost of those annual fees for you. 

Bankrate.com is one site that offers comparison for credit cards based on rewards, fees, interest rates, balance transfers, cash back rewards, and many other features or terms.

Purchasing single-serve items.  Are you in the habit of purchasing a daily coffee from the coffee shop or snacks and soda from a vending machine?  It does not seem like much but over time these small expenses can add up. 

For example, daily coffee at $4.00 a day at 5 days a week, 52 weeks a year is $1040.   Suppose you save that money, what could you do with $1040?  A mini emergency fund perhaps.  

As you can see, it may be more cost-effective to purchase items in bulk and then make your coffee at home.  Do the same with soda or snacks.  What other ideas or tips do you have for a grocery spending plan? 

Do nothing.  After reading these tips take some action.  Brainstorm ideas set some goals and apply what you’ve read.  Hopefully, you’re ready to apply some of these tips to your situation.  Maybe you still have questions or would like to research more financial tips. 

Maybe you feel like you need to speak with a financial coach or counselor. 

What is important is that you understand that you can improve your financial health and start taking steps in that direction.  The sooner you take action to improve your financial health the better.

Are some of your financial behaviors unhealthy?  Take a serious look at them and determine if they are.  The first step in solving a problem is finding the problem.  These are just a few tips.  Can you think more?

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How to Stop Leaks in your Spending Plan

Spending is a leak once you realize how much you are spending, and the purchase feels that it is not worth the money.  For example, you may not appreciate how much you spend eating lunch out every day until you track your expenses and then realize the amount of money you are spending weekly or monthly on lunch.

Does it seem that you never have enough money to buy the things you would like to or need for your family?  If you answered yes, you may have some leaks in your spending.  That means you are spending money without knowing where it is going. 

This can be a serious problem that can threaten your financial security.  And stopping leaks in your spending can help you get more of those things that you want for your family. 

There could be many reasons for the leaks but learning to recognize some of them may help you plug the leaks.

Do you keep meaningful records of where your money goes?  Keeping track or keeping a record of your spending will show where your money is being spent.  From this record, you can decide whether you should make changes to your spending plan and exactly what changes to make. 

For example, as you keep a record of your spending, you will begin to see areas that you will be able to cut back on or eliminate. 

Spending is a leak once you realize how much you are spending, and the purchase feels that it is not worth the money.  For example, you may not appreciate how much you spend eating lunch out every day until you track your expenses and then realize the amount of money you are spending weekly or monthly on lunch.

Do you plan to spend your money?  Planning to spend your money can be well worth the effort.  That’s because it can help you spend your money wisely rather than letting it disappear without a trace. 

Start with your income, and then write down your spending categories and how much money you will allocate to each one.  With careful planning, you may begin to get many of those things that you want for your family.

Do you live within your means?  Living within your means says that you are not spending more than you can afford or more than you make. 

If you are living within your means, you are spending money wisely and not using credit cards for everyday expenses.  If you live within your means, you won’t need to use credit cards and loans for everything.    

Do you buy only what you need or use?  Buying in bundles or buying more features than you need or use will slowly drain your spending plan. 

Remember, little expenses add up. 

If you are not watching those extra channels on cable or using your TV or movie subscription service like Netflix, or using extra features in your phone plan, consider scaling back to what you do use to cut down on cost.   

Do you plan your shopping trips?  Before heading out to the store, take note of what you have and what you need.  Try not to shop when you do not need anything, going shopping when you’re bored, or going shopping to kill time. 

Have you ever walked into a store to get one thing and came out with a cart full of merchandise?  Were all these items necessary?  How will this purchase affect your budget? 

When you are going shopping, making a list beforehand and stick to the list.  Sticking to the list will prevent you from going over your budget and making unnecessary purchases.

Stopping these leaks in spending will help you purchase some of the things you want for your family.  Additionally, by tracking your spending, you will begin to see areas where you will be able to and where you can save money by cutting some expenses.  Subscribe to my blog here and get more practical tips to help you plan your spending.    

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Managing Money Through Tough Financial Times

You should set aside some money, six to twelve months or so of expenses as a rainy day or contingency fund.  An emergency fund allows you to stick to your spending plan and still take care of that unexpected medical bill or car repair.  It also gives you confidence and peace of mind knowing that an emergency expense won’t derail your plan.         

The past couple of years have been tough financially for many.  Saving for the future and making sound financial decisions can help you endure the next economic downturn.  Below are some tips to help you manage through tough financial times.

Start saving for an emergency fund or rainy-day fund.  Do you remember when your grandmother told you to save something for a rainy day?  Today, this is an old-school recommendation that is made by many financial coaches.  You should set aside some money, six to twelve months or so of expenses as a rainy day or contingency fund.  An emergency fund allows you to stick to your spending plan and still take care of that unexpected medical bill or car repair.  It also gives you confidence and peace of mind knowing that an emergency expense won’t derail your plan.         

Make a plan to spend your money.  Most people do not deliberately plan to spend their money.  Bills come, and bills get paid.  Money comes in, and money goes out.  They go to the store and spend without a clear plan for their spending.  To manage money in tough financial times you should plan to spend your money.  Before you get paid, sit down and write out where you plan to spend your money.  If you can, try and base the spending on the previous month or prior spending history.  For example, if you spent $150 at the grocery store last week, you would probably spend $150, or close to it this week. 

Keep track of where you are spending your money.  Get a piece of paper and pencil and sit down and keep track of every-dime you.  By tracking your spending you accomplish two things.  First, you give yourself a benchmark to plan the next month or period’s spending; the next month’s spending plan.  Second, you begin to see where you can cut back on spending.  By writing down where you spend money you will begin to see patterns of behavior that can be changed to save you money and help you spend smarter. 

Use credit cards with care.  During tough financial times, keep your credit card spending in check and attempt to pay balances in full every month.  If you cannot pay the full monthly bill, at least pay the minimum balance due.  Every dollar over the minimum reduces the amount of interest you will pay. 

Comparison shop and get the best deals for financial products.  Shop deals on things like credit cards, loans, and other investments.  Avoid alternative forms of borrowing including, payday loans, pawnshops, and overdraft protection.  Keep away from these borrowing methods because they are very likely to have higher interest rates and can add up quickly.  This is as crucial as shopping for other big-ticket items like cars or appliances.  Saving even a percentage point on a loan can make a big difference to the bottom line.  And when it comes to your investments, compare fees on mutual funds and other investments       

Using the tips above will help you prepare and go through tough financial times.  As Maya Angelou said, “Hoping for the best, prepared for the worst, and unsurprised by anything in between.”

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A Spending Plan: Help in More Ways Than One

Americans raised at the top and bottom of the income ladder are likely to remain there themselves as adults. This lack of mobility is referred to as “stickiness at the ends,” as the people born on both ends of the income distribution are more likely to stay over a generation.

According to Pew Charitable Trust, 43% of Americans whose childhood homes are in the bottom economic quintile remain as adults.  Those children grow up in a lower economic bracket, and they tend to stay there. 

Financial statistics show that people who are born poor are more likely to remain poor throughout their lives. Only 4% of children born at or into the bottom, economically, rise to the top.

In contrast, 40% of people born in the top quintile remain there for the rest of their lives.  These children born in a higher economic bracket tend to stay in that higher bracket. 

Americans raised at the top and bottom of the income ladder are likely to remain there, themselves as adults. This lack of mobility is referred to as “stickiness at the ends,” as the people born on both ends of the income distribution are more likely to stay in the bracket they were born into.

People born in the middle income bracket have a 50-50 chance of ending up in a higher or lower income bracket.

A spending plan isn’t always a comfortable topic, especially for people dealing with debt and bills.  However, I believe that it is one strategy that can, among other things, change the stickiness dilemma.  

Regardless of your current financial position, a spending plan and an understanding of the financial landscape can provide interesting and valuable insight as you move along your journey toward a better financial situation.  It allows us to see where you are and the improvements that need to be made. A spending plan is the first step.

If you have never used a spending plan or budget you are not alone.  According to a Penny Hoarder survey, A little over 55% of Americans do not use a spending plan to manage their money.

Similarly, 56% of survey respondents said they didn’t know how much money they spent last month.

Those who kept a spending plan were more likely to know how much they spent and where they spent money.  They were also less likely to had squandered on something that deterred the ability to pay bills.

A spending plan or budget is extremely useful in helping people keep tabs on their spending and reach financial goals.

Nineteen percent of respondents said they didn’t use a spending plan or budget because they didn’t have the time or energy and another 19% chalked it up to lack of organization. And 6% of Americans said they don’t budget because they know they’ll overspend anyway.

Creating a spending plan is one of the goldenrule$ of managing money better. 

If you’ve never budgeted before, it can be difficult to know how to best go about it, but I encourage you to subscribe to my blog here and learn how a practical and well thought out spending plan can help you manage your money better and reach your financial goals.

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Don’t Resist the Change

Research has shown that when people are trying to change destructive or negative behaviors, only 20 percent of us are in a ready or action phase to change this behavior. The other 80 percent are really not interested in changing at all and are in fact various stages of ambivalence toward the bad behavior.

We resist a lot of things.  We resist significant others, we resist those more knowledgeable, we resist authority, and we resist change.  Resistance is a part of life; it’s in our DNA and can be extremely dangerous.  Resistance is an automatic response to feeling coaxed or to misunderstanding.  It is, misunderstanding or lack of clear, effective communication that, in my opinion, started every conflict that has ever been.  And so, it goes with managing our finances as well.   

Research has shown that when people are trying to change destructive or negative behaviors, only 20 percent of us are in a ready or action phase to change this behavior. 

The other 80 percent are really not interested in changing at all and are in fact various stages of ambivalence toward the bad behavior.

One of my favorite quotes from Mahatma Gandhi is, “You must be the change you want to see in the world.”

I like it because it can be used and adapted to many situations and circumstances.  If you want to make a change in your financial life, you must change your financial behavior or how you handle money.  And to do that, you need to think differently. 

The following tips will help you realize the change you want to see in your finances and help you improve your financial behavior.  

See that Change is Needed

You are the one, you are the person that will need to make the decision to change.  No one can make that decision for you.   And to make a change you must first see a need for change.  Until you see a real tangible need for change or realize the need for change, no change will take place. 

You may not see a pressing need for change at the current time but maybe a family member or friend does. 

Ask them if they feel like a certain spending pattern needs to adjust. 

If enough family or friends think that you overspend when you go shopping, you probably do and a change in your spending habits is needed.   Doing this, can help you see behavior that you may not see, or not see as such a problem.  

Develop and Implement Plan of Action

Once you decide to change you need a plan to make the adjustments needed.  Your plan should map out steps that you will take to change and possible barriers to finishing the plan. 

Additionally, you need to develop strategies for combating the barriers to plan completion.  For example, maybe you have a problem when you go shopping that you spend more than you should.   This could be a barrier to your plan for changing your overspending habits not coming to completion.  Therefore, to combat this barrier, you set a spending limit and take that amount of money with you when you go shopping so that you will not go over the limit. 

Maybe you make a list beforehand and take it with you as a tool to combat overspending. 

Review and Revise Plan

Plans are just that, plans, and almost meant for change.  Review your plans periodically to see if you are working with your plan and it is working with you.  If your plan seems to be working…great!  No need for adjustments, keep doing what you are doing. 

However, if the plan does not seem to be working, it’s time to make a change.  Try going back to the problem that caused you to change in the first place. 

Are you seeing the problem correctly? 

Next, revise the plan based on how you see the change that is needed now. 

You can change destructive or bad behaviors.  You must want to change the behavior first.  Then develop a plan and review the plan every week or so.  Revise the plan when it is not working for you.  

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Tips to help you Reduce Financial Stress

According to Peter Drucker, a management consultant, author, educator, and the described founder of modern management, “Doing the right thing is more important than doing things right.” Doing the right thing is effectiveness; doing things right is efficiency. 

Sometimes stress is caused by expectations not met.  We think things should go one way with our finances and they go the other.  When this happens, when financial reality does not line up with our expectations, we sometimes become disappointed, and stress results.  Use the following tips to help you avoid money stress and lower financial stressors. 

Plan to Spend your Money

Using time to think and plan is using time wisely.  In fact, if you fail to take time for planning, you are, in effect, planning to fail.

As I have written before, managing money is a job, and it takes time, so plan accordingly.

Set Financial Goals

Financial goals should provide direction to your life and determine how you spend your time and money.  When setting goals, decide what you want, where you want to be, and what you want your money to do.  Further, when you set goals, set goals that are SMART (specific, measurable, achievable, realistic, and have a time constraint.)   

The best goals are those that cause you to “stretch” as you do your best to reach them. 

Prioritize

Use the “80-20 Rule” originated by Italian economist Vilfredo Pareto.  The 80-20 rule says that “80 percent of the reward comes from 20 percent of the effort.” The key to prioritizing is to identify the valuable 20 percent. 

Once identified, prioritize your time to work on those items with the greatest reward.  If you value managing money better, prioritize the time it takes to manage it better.   

Be Flexible

According to Peter Drucker, a management consultant, author, educator, and the described founder of modern management, “Doing the right thing is more important than doing things right.” Doing the right thing is effectiveness; doing things right is efficiency. 

Be flexible when working your money, focus first on the urgent, effective task, then concentrate on the important, efficient task.

The tips above can help you eliminate or reduce money stress in your life.  Be careful with stress it can cause mental, emotional, and physical health issues. How do you reduce financial stress?  I would love to hear from you.

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Plan to Spend Your Money

All the things we do with money can fit into these three categories.  So, it is okay to spend your hard-earned, worked for, money; all I am saying is to plan to spend your money.

One of the reasons why we fail at managing our money is because quite often we do not plan to spend money.  Now, to that you may say, it’s my money, and I will do what I want with it.  I worked hard for it and it’s okay to spend it.  And you are right; it is okay to spend your hard-earned money.  But before you spend that money, read the rest of this. 

If you really think about it, money is only good for three things, and we have all done them. 

Money is good for:  spending, saving, and giving, that’s it.  All the things we do with money can fit into these three categories.  So, it is okay to spend your hard-earned, worked for, money; all I am saying is to plan to spend your money.

So, what happens if you do not plan to spend your money?  You spend money at places and on things that you did not plan to spend money on.  It’s that simple.  Have you ever gone into a store and spent more money than you planned to spend? 

That’s it, it happens every day. 

When we do not plan to spend our money, we allow others to take control and spend our money.  You are not managing your money effectively because you are not planning to spend it.         

When you go to the grocery or the pharmacy and you get to the checkout, do you plan to buy that magazine or that candy bar?  We are visual beings and if we see something we like most of the time we will buy it. 

You may think that that is not a lot, but if you do this every day, that is buy something that you did not plan to, it adds up.  Let’s say that in an average month, you spend $5 a week on magazines and candy bars at the checkout.  It does not seem like much but over time it grows. 

Five dollars a week works out to be $20 a month and, in a year, you spent $240 on candy bars and magazines or whatever.     

So what happens if you plan to spend your money?  When you plan to spend your money, you have a spending plan or budget, and you know where you are spending your money.  You know how much money you are spending, and you are not haphazardly spending money on things and in places you did not plan on. 

When you plan to spend your money, through your spending plan, you are telling your money where to go and what to do.  You have complete control of your finances. 

We have already established that it is okay to spend your money, so it is okay to spend $20 on magazines and candy bars. I just want you to plan to spend that $20 on magazines and candy bars. 

It is important that you plan to spend your money.  When you do not, you give control of spending your money to others.  When you plan to spend your money, you take control of your financial situation.  The choice is yours – choose to plan to spend.       

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You Need an Emergency Fund

This is especially during this time of the COVID-19 pandemic.  You never really know what happened.  Either they lost a job due to COVID-19, or something else dealing with COVID-19 like a parent or close family member getting sick.  Maybe they were not living within their means or got extended with bills, and just could not keep up. 

As I sit here this morning, a car is being reposed right outside my window.  Wow.  It’s a nice newer jeep compass, black, with nice tires.

Boy, that happen quick.   

I have had several cars reposed and I have never seen it happen, but it’s not a good feeling when it does. 

This is especially true during this time of the COVID-19 pandemic.  You never really know what happened.  Either they lost a job due to COVID-19, or something else dealing with COVID-19 like a parent or close family member getting sick.  Maybe they were not living within their means or got extended with bills, and just could not keep up. 

This is why working from a spending plan and planning to spend our money is so important.  A spending plan will help you keep spending in check and help us avoid negative experiences with money like repossessions.     

Whatever the case, when this happened to me I did not have an emergency fund that I could turn to and most people don’t. 

An emergency fund or contingency fund, what I like to call it, is just what the name implies, it’s a pool of money that is used for emergencies.  A fully–funded emergency fund could equal whatever you wanted it to be, but most would suggest an emergency fund of 3 to 6 months of living expenses. 

If you do not have an emergency fund or contingency fund, start today, start where you are, and start building yours. 

If you do not have any financial goals, make it your first financial goal…a fully-funded emergency fund, and then save toward the goal.  

Did you know if you saved $83 a month in 12 months, you would have $1,000 saved in your emergency fund.   

Share your thoughts, subscribe to the GoldenRules Blog, and learn how to create a winning spending plan for you and your family.  Share and like this post.

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Four Strategies to Help You Start Saving

Pay off high-cost debt.  The best investment most borrowers can make is to pay off consumer debt with double-digit interest rates.  For example, if you have a $3,000 credit card balance at 19.8 percent, and you only pay the required minimum payment of 2 percent of the balance or $15 whichever is greater, it will take 39 years to pay off the loan. 

The personal saving rate in America in June of 2021 was 9.4%, which is a good rate of saving.  However, some families are not saving adequately for retirement, and lower-income households do not have adequate emergency savings for unexpected expenditures such as car repairs or medical bills. 

Saving must become a Priority

The mindset of saving needs to change.  Saving is an important part of financial security and a spending plan or budget can help you save. 

This can be done by setting saving goals and then developing a plan to meet the goal. 

Here are four saving strategies that may help get you started in the right direction:

  1. Pay off high-cost debt.  The best investment most borrowers can make is to pay off consumer debt with double-digit interest rates.  For example, if you have a $3,000 credit card balance at 19.8 percent, and you only pay the required minimum payment of 2 percent of the balance or $15 whichever is greater, it will take 39 years to pay off the loan. 

With accumulating interest, you will pay more than $10,000 in interest charges.

  • Buy a home and pay off the mortgage before you retire.  The largest asset of most middle-income families is their home equity.  Once these families have made their last mortgage payment, they have far lower housing expenses.  They also have an asset that can be borrowed against in emergencies or converted into cash through the sale of the home.
  • Participate in a work-related retirement program.  If you participate in a work-related retirement program such as a 401k plan, with a dollar-for-dollar match, you will likely receive an annual yield of greater than 100 percent of your investment.  You save $100 and get $200 or more with the employer match.
  • Outside of work, save monthly through an automatic transfer from checking to savings.  These savings will provide funds for emergencies, home purchases, school tuition, or even retirement.  What you don’t see, you will probably not miss.

Once you realize that you need to save, develop a saving goal.  Then develop a plan to meet the goal. 

If you do not have an emergency fund, that should be your first goal.  Build up a $1000 emergency fund. 

By using the strategies above, you could, in no time, be on your way to meeting your goal and improving your financial situation.

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Money Attitudes and the Family

People look to an increase in income as the way to solve their financial difficulties.   If there is one thing that poor money managers have in common, it is the idea that they do not earn enough.  Rarely does it occur to them that the real cause of their financial trouble is that they spend on things that do not fit with their financial goals and objectives if they have goals and objectives at all.

One of the major battlefields in families is the issue of handling finances.  Fully one-half of couples that seek professional counseling report severe money problems as a major issue.  Only a small percentage of these couples are in financial difficulty because of inadequate income or too little income.  Many are in financial difficulty because they have been immature and unrealistic in their attitudes about money. 

While we must recognize that money does constitute problems in many families, we must remember that for every problem there is a solution.  The following are some items that can help:

  • We must realize that money is a resource and not the source.  It is a tool to help you reach your financial goals. 
  • Track the expenses of everyone in the family.  Even the small expenses.  You cannot effectively manage money if you do not know where it is being spent.  Once you know where it is being spent, you will see where changes can be made in spending.   
  • Be realistic in making financial decisions.  Figures do not lie.  If the numbers do not support a new digital TV, why are you buying one? 
  • Set both long- and short-range goals for your families’ finances.  Write them down make them plain and refer to them often.  Make your goals SMART.  (Specific, Measurable, Attainable, Realistic, and within some designated Time frame)         
  • Keep in mind that the family income is our income, the families, and should be treated as such.
  • Discuss your attitudes and emotions about money and expenditures openly and honestly as a family.  Listen to your mate and children…communicate!
  • Both husband and wife should understand every intricate detail of the family finances.  We are all unique individuals and the attitudes we have about money can contribute to a solution to a financial problem.  All the spending plans in the world will not compensate for the ignorance of a partner in financial matters and communication. 
  • Credit buying should not result in payments of more than 15% of your income.  This means for everyone hundred dollars you earn, you should not have more than a fifteen-dollar dept payment excluding rent or mortgage and car.
  • Do not acquire new debt until you have paid off the old debt. 

Remember the amount of your income is considerably less important than the way you handle it. 

This is true on every economic level! 

People look to an increase in income as the way to solve their financial difficulties.   If there is one thing that poor money managers have in common, it is the idea that they do not earn enough.  Rarely does it occur to them that the real cause of their financial trouble is that they spend on things that do not fit with their financial goals and objectives if they have goals and objectives at all.

Many times, the relief is short-lived and the real cause of their financial difficulties, bad spending habits, failure to plan, lack of discipline, money attitudes, eventually catches up with them and they are right back in the same position they were in.     

When you make deliberate choices about money, with full awareness of the consequences and a willingness to accept them, you are acting in a mature way concerning money. 

Keep in mind that money is good for three things: spending, saving, and giving.  If you do this right, with your financial goals and plans in mind, you will have the right attitude about money and begin to win with your finances.         

Share your thoughts.  Like and subscribe to the GoldenRules Blog and learn how to create a winning spending plan for you and your family.

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Communicating About Money

We all attach emotions to money. Emotions such as freedom, trust, self-esteem, guilt, indifference, envy, security, comfort, power, and control.

When dealing with money, we bring patterns, beliefs, and attitudes that were present and observed from our families.

I do, you do, we all connect strong emotions to money when communicating about money.

We all attach emotions to money.  Emotions such as freedom, trust, self-esteem, guilt, indifference, envy, security, comfort, power, and control. 

When dealing with money, we bring patterns, beliefs, and attitudes that were present and observed from our families.  I know I did.

Author Judith Viorst suggests that becoming responsible and adept at managing our money represents a true passage into adulthood.  And this would include communicating effectively with significant others about money.  Addressing questions openly and calmly can help keep emotions in check. 

Additionally, try separately writing down the answers to the following questions.  Once completed, schedule a time to meet and discuss.  This could be a very effective way to begin the money discussion with significant others. 

  1.  What is my biggest money worry today?
  2. What are we doing well financially?
  3. Is there an issue in our finances that I would like to understand better?
  4. If we need to cut back our spending, what three areas are off-limits and what three could be changed?
  5. What money issues do we avoid and how can we bring them into the open?

Can you think of other questions that would be good to ask when communicating about money?  Comment below and let us know what you think. 

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Need a new job? Manage Your Money Better

Choose a specific time to sit down and work your finances.  Maybe on a Friday evening after you put the kids to bed, or Saturday morning, or a Sunday after church.  It is important to sit down and spend the time to work your finances. 

We go to work every day and work hard.   When we come home the last thing, we want to do is do more work besides the other than the normal, housework.   We may not want to do more work, but if we want to manage our money, we must work at it. 

Managing your money is much like a job, it takes time and consistency, it takes work.       

It Takes Time – Managing money takes time.  It takes time to sit down and prepare your spending plan and determine how you are going to spend your money.  

Choose a specific time to sit down and work your finances.  Maybe on a Friday evening after you put the kids to bed, or Saturday morning, or a Sunday after church.  It is important to sit down and spend the time to work your finances. 

Track and record to determine if you are meeting your spending plan goals and adjust as necessary.  

It Takes Consistency – Just like being consistent at anything you do; you need to be consistent with managing your money. 

Whenever you get paid whether it is weekly or monthly or biweekly, sit down at regular intervals and work your spending plan and finances.  Making sure that we are on track with the budget.  The bills are being paid on time and things are working out as we planned. 

It is a good idea to be consistent with that time.  So, if you are working your finances on Friday evenings, you want to do that every Friday evening, consistently. 

Once you do this for a couple of pay periods, you will create a habit of working your finances and it will become easier.

It Takes Work– Fix up a place at home to work.  A desk and a nice comfortable chair for starters.  All of the equipment that you need to work pencil, paper, spending plan, computer, and financial goals.  Additionally, any paperwork; bills, reports, spreadsheets, or bank statements that may be needed to work your finances. 

Now it is time to work.  Compare your spending plan to your actual spending and then ask yourself the following questions.  Is everything going as planned?  Did something come up that calls for a change in the plan?  What needs to be paid this week or next? 

Once you get into a habit of doing this it will become much easier. 

You will be in control of your finance.  Telling your money what to do and it will be working for you.  You will find money you did not know you had, you know, that money that you did not have a plan for, but you spent anyway. 

You have to take the time, be consistent and work your money before someone else does.   Managing your money is your responsibility, and it is a job.                  

Share this post and like it and you think it will help somebody. 

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A Way to a Better Spending Plan or Budget

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. 

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.

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Money Mindsets, How’s Yours?

 Do you see light at the end of the tunnel or the further you go; it seems like the longer the tunnel gets?

Do you see money as a tool to help you achieve goals or something that keeps you constantly working Harder for the Money?  

Do you see reflections of money in puddles and wish you hadn’t bought that new car last year?  Do you see light at the end of the tunnel or the further you go; it seems like the longer the tunnel gets?

Consider these mindsets that show a healthy attitude towards money affairs.

  • You are in control of your money instead of it controlling you. 
  • Your money is working for you instead of you working for it.
  • Your money is just not for needs but it also enriches life in constructive ways.
  • Money is not the end goal but a tool to help you achieve your end goals.
  • Sometimes you freely spend money without feeling guilty afterward.
  • You have concluded the money or more money will not solve all your problems.
  • You stick and adhere to your values about money.
  • You know how you utilize to use money and what it represents to you.

Based on the 8 mindsets have you achieved peace with your money?  I am a Financial Coach, and I can help you.  Contact me for assistance.

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Sticking to a Spending Plan

So, you’ve set a spending plan or budget for your family. You have created this thing to help you plan to spend your money, now what? You are excited and feeling good because you are being a good steward of what GOD has given you.
At the same time, apprehensive because this spending plan/budget thing has never worked for me before. It’s just hard to follow.

So, you’ve set a spending plan or budget for your family.  You have created this thing to help you plan to spend your money, now what?  You are excited and feeling good because you are being a good steward of what GOD has given you. 

At the same time, apprehensive because this spending plan/budget thing has never worked for me before.  It’s just hard to follow.    

So, how do you stick to that spending plan that you meticulously crafted and are so proud of?  After all, for most of us, sticking to a spending plan can be the scariest part of managing money better.   

Sticking To a Spending Plan is a Mind Set

Creating and working with a spending plan is not a one-time and done thing its an ongoing process.  You have to work your money over and over again.  At regular intervals sit down with your spending plan and see where you are and where you need to make changes

 What adjustments do you need to make?  Are you sticking to your spending plan?  Do you need to cut here or cut there?      

Developing the right mindset for building wealth requires practice, as well as tenacity. Managing money well stems from a well-developed set of mental processes and you get a well-developed mental process with consistency.   

Here are a few ideas to help you stay on course.

First, refer to the receipts and records of your spending that you are now keeping.  Compare them to your budget or spending plan.  Do this weekly or even daily, to start with.  I suggest that you set distinct times to work your budget and money. 

Friday evenings, Saturday mornings, or Sunday afternoon, after church are good times (If you have young kids though, they probably wake you up on Saturdays). 

If you are within your budget, you are doing well and do not change a thing.  If you are not within your budget, make the needed corrections and keep monitoring you’re spending.  Keep a check on your spending and your financial situation at the top of your mind.  This can help to curb your desire to spend, spend, spend, and ensures you know how much you actually have to spend.   


Make it a Family Affair

Include the whole family in the budget.  Teach them that the family pack saves money or that saving a dollar this week means having extra money for fun stuff later. Have children go shopping with you and point out what saves you money.  Try putting savings towards something the whole family can enjoy, such as a fun weekend out of town.  Including the whole family in the budget will make it easier to stay on budget and teach good financial habits for the future as well.

Remember your Financial Goals

Remind yourself frequently of your financial goals.  Paying off a big debt, retiring early, or the emergency fund, are financial goals that can keep you on budget.  Keep your goals in front of you.  Post them on your mirror in the bathroom, your car dashboard, and your purse or wallet.  Pull them out and look at them when you are feeling weak. 

Stick to your Lists

Make a list before you go shopping and stick to the list.  Take the list with you and only buy what is on the list! 

It does not matter if it is Wal Mart or Home Depot…stay on the list! 

Additionally, do not go shopping hungry.  When shopping online look for coupons and comparison shop for the best deals.  Talk yourself out of purchases and do not spend money you do not have.  Give yourself some time to consider and rationalize before buying, and if you decide later that you need it, go get it.

­

­Be Flexible 

Remember that life is unpredictable, and things happen that are out of our control. When­, you make a budget, try to allow some extra money for variable expenses.  Be gentle with yourself if you go over your budget, it can be hard to get back on track ­if you let yourself get too frustrated over a mistake or two.

­Follow­ing these tips can help you stick to your budget, and you can feel good about keeping your finances under control.  Make sure you update your budget regularly and prioritize your spending and know what is important enough to be worth your hard-earned money.

What are some tips that you use to stick to your spending plan?  Share your thoughts and subscribe to my blog.  I would love to hear from you.

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Why Have a Spending Plan?

I write today to convince you that having a budget or spending plan is good.  And hopefully, provoke you to create a spending plan and see it differently than you currently do after you read this article. 

I was teaching a class of young people a couple of weeks ago and we were talking about budgeting or what some would call a spending plan. 

After a while, the conversation turned quite disturbing.  That’s because I found myself trying to convince them that having a spending plan was a good thing. 

A statement made by one of the young people was, “I can’t take the money with me (when I die), so I am going to spend it on what I want to, now.” 

These young people had a short-term view of money. 

So, I write today to convince you that having a budget or spending plan is good.  And hopefully, provoke you to create a spending plan and see it differently than you currently do after you read this article. 

A budget or spending plan is a plan for spending your money in a given time frame.  Why is that not a good idea?  Wait, why is that a good idea?

A budget is about setting targets for how you spend your money.  This is where you decide how you want to spend your money going forward. 

There are many good reasons for a budget or spending plan I will only give you five here:

  1.  A budget reduces money-related anxiety.  Money problems and fights are the leading cause or one of the leading causes of divorce in this country.  And for those of you who are single, you can still fight and worry about money.  What about those money worries.  “How am I going to do this or that?”  A spending plan can reduce and eliminate that.
  • A spending plan gives you control.  With a spending plan, you are telling your money where to go and what to do.  I do not know about you but, I work hard for my money, and I want it to go where I want it to go.  It’s mine.  When you don’t have a spending plan, the marketers are pulling on your money everywhere you look, and you are bound to spend money on things you did not need or really want.

While you are reading this, someone somewhere is trying to figure out how to sell you something.

  • A budget helps you reach your goals.  Having a spending plan helps you save money.  And with the savings, you can build assets and improve your quality of life.  You can buy things of value like houses and businesses.  It helps you to avoid diversions that may try to keep you from reaching your goals. 

A plan for spending your money – a budget, can also be a plan on how not to spend your money.  It can help you avoid bumps in the road to your goals and dreams. 

  • A budget helps you be a better steward of your money.  Without a plan to spend your money, are you being the best steward of your money that you can?  In today’s environment, it is crucial to have a plan to spend money.
  • A spending plan is crucial in business and should be for “You Incorporated” as well.  Would you think of running a business or managing a business without a spending plan?  Can you imagine the chaos that would come by not having one?  Why would you manage your personal finances without one?

Although there are more, there you have it, 5, very good reasons to have a spending plan.  A spending plan is crucial to your financial health and wellness.  I think it is a mistake to try to manage your money without it.

Are you convinced that you need a spending plan?  Leave a comment below and subscribe to the GoldenRules Blog and learn how to create a winning spending plan for you and your family.  And share this with people that may benefit.

Personal Financial Planning

In the economic environment of today, personal financial planning is a crucial function. We all can manage our finances better to meet our goals and objectives. Effectively managing finances results from an organized process called personal money management or personal financial planning.

So Exactly What Is Personal Financial Planning?

Generally, personal financial planning is managing your money to achieve personal economic satisfaction. The process allows you to control your financial situation. Every household is different and has unique financial goals and objectives. Therefore, financial activity needs to be carefully planned to meet specific needs and goals. The process consists of six logical steps designed to set you on the right path with your finances. They are based on your goals and objectives and once you reach step six, would start the process again. A financial counselor can help you with all these steps.

Step 1: Determine Current Situation

In this first step, you will determine your current financial situation concerning income, living expenses debt, and savings. Prepare a balance sheet or a list of current asset and debt balances to determine net worth. The net worth statement should be completed once a yer and the information in it will give a foundation for financial planning activities.

Step 2: Develop Financial Goals

Specific financial goals are vital to financial planning and developed in this step. Your financial goal can range from spending your current income to developing a saving and investment strategy for your future financial security. Analyze your financial values and goals. This involves identifying your feelings about money and why you feel that way you do. The purpose of this analysis is to determine needs and then wants.

Step 3: Identify Alternative Courses of Action

Based on your financial situation, alternative courses of action are developed in this step to meet goals and objectives. Creating alternatives is crucial for making good decisions because many factors will influence the available alternatives. The more possible alternatives you have, the more effective and satisfying decisions can be made. Be creative, creativity in decisions making is vital to effective choices.

Step 4: Evaluate Alternatives

Next, you need to evaluate possible courses of action, considering your life situation, personal values, current economic conditions, and financial situation. Every decision has a consequence, and every choice closes off other alternatives. Decision-making will be an ongoing part of your personal and financial situation. Thus, you will also need to consider the lost opportunities resulting from your decisions.

Step 5: Create and Implement a Financial Action Plan

In this step of the financial planning process, an action plan is developed to achieve your goals and objectives. This requires choosing ways to achieve your goals based on the data you collected in previous steps. As you reach your short-term goals, your next priority goal will come into focus.

To implement your financial action plan, you may need help from others, such as a financial coach or insurance agent. Your financial team should consist of professionals; you should choose them with care.

Step 6: Reevaluate and Revise Your Plan

Financial planning is dynamic and does not end when you take a particular action. Regularly you will need to assess your financial decisions based on changing personal, social, and economic factors. Life events such as a job change or the birth of a child will affect your financial needs. The financial planning process provides a vehicle for adapting to those changes. Regularly reviewing your plan will help you make priority adjustments that align your financial goals and activities with your current life situation.


Relevant information is required at each stage of the decision-making process. Changing personal, social, and economic conditions will need you to continually supplement and update your knowledge and plans. A financial counselor can help you.

Personal financial planning will give you increased control over your financial situation by avoiding debt and dependence on others for financial security. Additionally, freedom from financial worries by looking to the future and anticipating expenses. A well-planned and communicated plan could improve personal relationships. If done effectively, personal financial planning is a win-win for everyone involved.

Treat your money like no one else. Click the link and check out other blog posts at GoldenRules here.

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