financial literacy Archives - GoldenRules Financial Strategies

What are Spending Plan 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.

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.

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.

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.

Managing Money Well Creates Choices

Managing money well gives you more choices and options. You see, money is just a tool to help you reach your goals and dreams. It’s an asset and a help. It’s not a master, and it’s a terrible god.

William Jennings Bryan, three-time Presidential candidate, put it this way in a speech in 1900, “There is a proper relation which should exist between man and money. Man, the handiwork of God, comes first: money, the handiwork of man, is of inferior importance.”

Our purpose is not to serve money, but for money to serve us and help us reach aspirations.

When money is managed well, good financial decisions are made and financial goals and dreams are moving forward. Some questions for you to consider are:

What are your goals for your money? When you make financial decisions, do you know the choices that you have? When you make financial decisions, do you make them based on your goals and dreams and do they support the financial life you want to create? Do you make financial decisions based on how they grow your assets?

These questions can guide you as you make financial decision and improve choices.

Assets Are Money Managed Well

The foundation of choices with money are assets and specifically, liquid assets. Asset that can easily be converted into cash in a short amount of time are called. Liquid assets include things like cash, money market instruments, and marketable securities.

Liquid assets are often viewed as cash, and likewise may be called cash equivalents because the owner is confident the assets can easily be exchanged for cash at any time.

Overall, liquid assets are very important for individuals because they are the first source of cash used in meeting payment obligations, financial shocks, emergencies, and the other things that we all do with money. Managing money well creates assets and provides the choice to go back to school or to quit your current job to look for a better one or start your own business.

David Kolb, An educator, says this about choices, “The way we process the possibilities of each new emerging event determines the range of choices and decisions we see. The choices and decisions we make to some extent determine the events we live through, and these events influence our future choices. Thus, we create ourselves through the choice of actual occasions we live through, and these events influence our future choices.” (Kolb 1984:63-64).

You can create better choices for you and your family!

Can A Financial Coach Help you Manage Money Well?

I am a financial coach/counselor and what I do is help people navigate financial choices to help them manage money better. I would love to help you manage your finances better. Imagine, a year from now and you have a different outlook on life and different perspective about your future. Working with you as your financial coach, we can make this happen.

The question is not can a financial coach help you, because they can, the question is, are you ready to be coached? Are you open to receive coaching so that you can make better financial decisions? Contact me if I can help you. Take care.