My most commonly asked question is “How can I create a budget that I actually stick to?” The answer to that question isn’t what you may think…
First things first, if you struggle to “stick to” your budget, then you need to stop budgeting. You need to create a spending plan, which is a different approach that goes beyond a simple budget. Let’s get into it!
What is a Budget:
A budget is meant for your monthly necessities. These are your recurring expenses that you need money for every. single. month. It’s the money that you need to exist and live. Think your rent or your mortgage payment, utilities, transportation, insurance, any medical expenses like prescriptions or copays, and your groceries.
These are the items you budget for. You know they’re happening, you can predict them, and you have a pretty good idea about what it’s going to cost.
A Spending Plan
On the other hand, a spending plan includes your budget. But it goes beyond just the simple budget for your necessities. It also includes your sinking funds, investments, debt payments, and lifestyle spending. It’s intentionally built around giving your dollars purpose and maximizing your savings.
With a spending plan, you make decisions on what’s important to you and allocate your dollars towards it. You intentionally set money aside so you can live more in specific areas of your life, and you make the choice to live less in other areas that are less important to you. A spending plan is how to approach your finances without restriction.
Budget is a Bad Word
So when you say that you struggle to stick to your budget, it’s because you’re not taking the right approach to planning your finances. This isn’t your fault; most of us weren’t taught how to create a spending plan.
We were taught how to budget. And as a result, we approach financial progress from a place of restriction and doubt. Budgeting is automatically associated with restriction. Budgeting makes us feel like we have less; like we can’t do things because well, it doesn’t fit into the budget. The goal of a budget is to spend the least amount of money possible. This creates a warped relationship with your money, because money is meant to be spent!
Money is a tool that creates opportunity in our lives and allows us to enjoy the fruits of our labor. What’s the point of making money and going to work if you can’t enjoy it, even once in a while?
When you build a spending plan, you’re factoring your goals into the equation. On top of that, you’re strategically planning out where you’ll spend your money in a way that’s aligned with your priorities, instead of simply spending the least amount of money possible.
There are 3 phases of building a spending plan effectively:
Building out your budget & setting effective financial goals.
Becoming a conscious spender. This happens through awareness of what’s important to you, what isn’t, and aligning your spending towards only the things that matter.
Using a comprehensive tool that brings everything together in one place!
If you have a budget that you don’t stick to, or that you create but never follow-up with, then you’re doing it wrong. Sorry not sorry! You need to create a spending plan. You need to go beyond simply budgeting, and start thinking about your savings goals and how you can spend your money in alignment with what you really want.
When you start looking past a simple budget, a whole new world of money management comes into play.