How to Create a Spending and Income Plan, Part Two

Welcome back to our series on creating a spending and income plan! This is part two, you can read part one right here. So far we have gotten clear on how much we’re spending and where the money is going, and we’ve also figured out about how much income we’re bringing in. Today, let’s get deeper into the process:

Create Your Plan

Now that you have a clear understanding of your income and expenses, it’s time to put together a plan. There are all kinds of ways to set up a spending plan. My mentor Karen McCall advocates for creating very specific categories.

In Financial Recovery, she lists categories like home, food, gifts, and business/project expenses, but she also lists categories like spiritual growth and self-care, to get you thinking about prioritizing these in both your spending and your life. With information from the previous step and some careful planning, you can create categories and estimate what your spending will be for each during the month ahead. 

Another approach that I sometimes use with people who are very focused on saving, is a set amount for flexible expenses. This method lumps all expenses that aren’t your fixed necessities (rent/mortgage, etc.) and gives you an amount of money to work with for all of them. I don’t necessarily recommend this as a long-term solution, but it can work when you’re getting started or have a savings goal to meet. 

Analyze Your Plan

With a basic plan in place, now is the time to take a look at your estimated income and make sure your plan will work for you. If there’s a shortfall, it’s time to make adjustments. 

Consider how you can alter your spending. How can you cull your spending and lower your expenses while still getting your needs met? At this step it can be valuable to reflect on your values and distinguish your needs from your wants

Similarly, at this stage you can ask yourself if it is possible to increase your income to cover the shortfall. This is something worth brainstorming about! 

Stick to Your Plan

Once you have created your and feel certain it will work for the month ahead, put it into action! The best way to do this is by staying in touch with your money and making sure you’re staying on track. 

I highly recommend beginning to do a weekly money check-in if you don’t already. Just 30 minutes out of your week can make a huge difference and help you stick to your carefully-crafted plan. Check out my article 3 Things to Look For During Your Weekly Money Check-In for ideas on how to stay on top of your money. 

Karen McCall also recommends doing a month-end review. During this step, you compare the spending plan you started with at the beginning of the month, to your actual spending during the entire month. Karen writes, “Comparing your planned to your actual spending and earning helps you gain clarity about how the spending-plan process works. This is an opportunity to get to know yourself better and to gain skills that will help you create your spending plans even more effectively.” 

The process outlined here is one that can be done solo or with an accountability partner. I love to work with clients through this process, and encourage you to reach out if you would like to work together! 

How to Tailor Your Income Goals to Your Life

One of my favorite sayings comes from the artist-turned-business mind Jennifer Armbrust: “A business is a needs-fulfillment machine.” Your business exists to support you; to fulfill your needs. However, if you don’t have a clear picture of what those needs are, it can be difficult for your business to fill them. This week, I’m suggesting that to really financially care for ourselves, we investigate the true costs of our lifestyles. By doing so, we will be able to make informed decisions about what income goals we’d like our businesses to meet. 

The Process

Time to take a realistic look at how much money you’re spending every month. Dig up the past three months of your bank and/or credit card statements. (For most of us, these should be available online). Go through line by line to see where your money is really going. Total up all the expense categories, i.e. groceries, utilities, rent, etc. 

Once you’ve got your totals, you have a realistic picture of how much money you need on a monthly basis. At this stage, you may find it helpful to look critically at your lifestyle, and see if there’s anything you’re interested in culling. If you’re looking for some ideas around creating a budget or spending plan, I’d recommend these articles of mine. Click here. 

Set Informed Goals

Whether you decide to create a spending plan and reign in your expenses, or feel satisfied with your lifestyle costs, you now have a complete picture of your financial needs. At this point, you can now set informed income goals that are designed to meet those needs in your personal life. Without this crucial information, your goals will just be shots in the dark, aimed at an amount of money that “sounds nice” but doesn’t tangibly satisfy a need.

Additionally, once your have this information, you can also take a look at how your business is doing in its current state. Is it making enough to support you? Whether you’ve got a side hustle or something you want to stretch into a full source of income, checking in with this question is important. If your answer is no, you can start to strategize around how you might close that gap. For more ideas on this, check out this post.

I hope this post inspires you to keep working to create a business that truly meets your needs. If you would like to work with an accountability partner and guide to identify your values and shape your finances around them, check out 4 Week Money Refresh, a package of 4 private 1 hour personal financial coaching sessions on early bird sale through April 15th!

Angela


This article was originally posted in 2019 as part of a month-long series on  financial self-care. Specifically, I’m focusing on what you can do with your money to take care of yourself and improve your business in 2019. You can read the whole series by clicking here. 

Image:  CoWomen

How to Set Informed Income Goals

How to Set Informed Income Goals: At Peace With Money

This article is the fourth in a month-long series on taking care of your finances as self-care. Specifically, I’m focusing on what you can do with your money to take care of yourself and improve your business in 2019. You can read the whole series by clicking here. 


One of my favorite sayings comes from the artist-turned-business mind Jennifer Armbrust: “A business is a needs-fulfillment machine.” Your business exists to support you; to fulfill your needs. However, if you don’t have a clear picture of what those needs are, it can be difficult for your business to fill them. This week, I’m suggesting that to really financially care for ourselves, we investigate the true costs of our lifestyles. By doing so, we will be able to make informed decisions about what income goals we’d like our businesses to meet. 

The Process

Time to take a realistic look at how much money you’re spending every month. Dig up the past three months of your bank and/or credit card statements. (For most of us, these should be available online). Go through line by line to see where your money is really going. Total up all the expense categories, i.e. groceries, utilities, rent, etc. 

Once you’ve got your totals, you have a realistic picture of how much money you need on a monthly basis. At this stage, you may find it helpful to look critically at your lifestyle, and see if there’s anything you’re interested in culling. If you’re looking for some ideas around creating a budget or spending plan, I’d recommend these articles of mine. Click here. 

Set Informed Goals

Whether you decide to create a spending plan and reign in your expenses, or feel satisfied with your lifestyle costs, you now have a complete picture of your financial needs. At this point, you can now set informed income goals that are designed to meet those needs in your personal life. Without this crucial information, your goals will just be shots in the dark, aimed at an amount of money that “sounds nice” but doesn’t tangibly satisfy a need.

Additionally, once your have this information, you can also take a look at how your business is doing in its current state. Is it making enough to support you? Whether you’ve got a side hustle or something you want to stretch into a full source of income, checking in with this question is important. If your answer is no, you can start to strategize around how you might close that gap. For more ideas on this, check out this post.

I hope this post inspires you to keep working to create a business that truly meets your needs. If you’d like to work with an accountability partner or need coaching around this, please check out my service packages and don’t be afraid to schedule a curiosity call!

Angela

Image Sources:  rawpixelMelissa Askew

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