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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.

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.

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.    

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.

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!