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! 

By |2022-08-23T14:55:08-07:00August 23rd, 2022|Categories: Financial Clarity, Personal Savings, Personal Spending|Tags: , , , , , , , |0 Comments
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How to Create a Spending and Income Plan, Part One

Planning ahead with your money is absolutely essential to leading a successful and stress-free life. Creating a spending and income plan for the month ahead can help you achieve your vision of financial freedom. Today, let’s get into the nitty gritty details of how to create a plan that will move you towards your financial goals. 

The ideas I’m going to share here are not new ones, but they are time-tested and solid. Many of my clients have worked with these processes, and I also take inspiration from my mentor Karen McCall, founder of MoneyGrit.(R). This article is part one of two, and these are the first two steps in the 5-step process. Let’s jump right in: 

Clarifying Your Spending

There are a couple ways to do this. I often recommend that my clients sit down with the past three months of their bank and/or credit card statements. (For most of us, these should be available online). Then, I ask them to go through line by line to see where money is really going. 

Karen McCall is a proponent of having people closely track their finances. She reports that the act of tracking every dollar is enough to bring a new level of mindfulness and intentionality into our spending. In her book Financial Recovery, she writes: 

“While people are hesitant to track because of what they fear they’ll have to give up, it is far more often the case that they get more of what they need and want by eliminating unconscious spending.” 

Tracking can be a longer process than simply reviewing your financial records retrospectively, but both bring great insight into where your money is going. Try both and see which works best for you! 

Clarify Your Income

Often when I say this, people immediately think specifically about the money they earn from their job. While this is definitely in the category of “income”, it’s likely not the only thing. Total up all your estimated income from various sources, like selling used items or rental property income. If you need to, you can go back and review all your income information that your bank statements provided you and use that to make an educated guess. 

If you are self-employed or in another situation where your income varies month-to-month, it’s still very important to complete this step. Make a conservative estimate of your income to avoid coming up short, or go through the process of setting up a money system and a solopreneur paycheck for yourself! See my article “How to Create Your Own Paycheck Using a Money System.”

Stay tuned for Part II – and make sure you take breaks and pace yourself through this process.

If you liked this article, you’ll probably love my e-Book, 9 Secrets to Financial Self Care. Get your free copy here!

By |2022-08-19T11:15:30-07:00August 19th, 2022|Categories: Financial Clarity, Money Mindset, Personal Spending|Tags: , , , , , , , , |0 Comments
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Why Planning Ahead is Key to Financial Success

How many times have you looked at your financial decisions only in hindsight? People often relate to their money that way – only examining their spending once the money’s been spent. While reflection is all well and good, planning ahead can make a big difference.

This month, we’re talking about creating a proactive plan for your spending and income. This plan is meant to orient you towards the future. Making decisions about where your money will go in the time ahead can be impactful for several reasons. Let’s talk about why this technique is so key to financial success!

Avoid Missteps Before They Happen

Sometimes we look over the money we spent in the past month, or check in with our income, and realize we made a couple missteps. We might have been living above our means, or spent a lot of money on something that didn’t really matter to us. These things might prevent us from having the finances and life that we want to have.

For example, unintentionally spending big in one place might result in us not being able to pay down a debt later in the month. Or, we might be unable to get a friend a birthday present. We might have overestimated our income for the month and find ourselves with less than we need.

Planning ahead and sticking to our spending and income plans can help us avoid these situations.

Anticipate Big Expenses

Rather than checking in on your money only when you fall short or have a big expense, planning ahead can help prevent this situation entirely. Here’s a great quote from my mentor Karen McCall, founder of MoneyGrit. (R):

While driving, no one would keep her eyes only on the rearview mirror, never looking through the windshield at the road ahead. To be fully mindful about your money, you have to look forward too.

When you have a spending plan in place, you’re able to relate to large upcoming expenses as things to plan for, rather than things to freak out about. This is a game changer and can help you think about the rest of your spending and income, and how it will be affected by the expense or situation.

Less Stress & More Intention

At the end of the day, creating a spending and income plan is really about is being good to yourself. The more you can make relaxed, proactive decisions about money, the more you can eliminate financial stress from your life. When you create a plan for your spending and income that’s based on creating a life you love, that money and how you spend it become more fulfilling for you.

Planning ahead can create financial stability, and it can also create greater life satisfaction. Isn’t that really what financial success looks like for most of us?

If you enjoyed this article, you’d probably enjoy my free e-Book, 9 Secrets to Financial Self Care. Click below to download your free copy!

By |2022-08-11T12:42:55-07:00August 11th, 2022|Categories: Financial Clarity, Personal Savings, Personal Spending|Tags: , , , , |0 Comments
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How to Develop Good Money Tools So You Can Be As Generous As You Want

I know many kind and generous people who wish to give money to organizations or causes they support, or simply other people in the community who are in need. However, sometimes being clear on how much you can afford to donate is difficult.

To clear this up, you need to develop a solid financial base for yourself. I’m talking about using a spending plan, a savings plan, and money mapping to get clear on where your money is going. Let’s look at how each of these three tools can help you give more easily:

Spending Plan

First, you need to know how much you’re spending and where it’s going. Take a walk through your income and expenses and figure out how much you’re saving, if you are saving. The point of developing a spending plan (also known by the less-fun-sounding-term “budget”) is to get clear on what your spending is like right now, and how it compares to your income. When you look at this, you can see what your spending priorities currently are, and you can start to think about that critically. Do you really want to eat takeout food every week, or would you rather be able to donate that $35 to a conservation campaign like Protect Juristac? Looking at your spending and weighing your priorities can make room for the giving you want to do. To develop a good spending plan, check out my article with ideas and strategies here.

Savings Plan

Saving money gives you serious options, whether you’re saving for an emergency fund or a big purchase. You can also decide to dedicate a portion of your savings directly to giving. Maybe, you decide to save 5% of your income every month and donate it to the COVID-19 Hopi Relief Fund at the end of the year. Whether the giving comes out of your savings or your spending plan, having both gives you a fuller picture of how you can spend, give, and save for your goals. You can read more about creating a savings plan for yourself here.

Money Mapping

Once you’ve got the spending and the saving figured out, you can put it all together into a money map! Money mapping is a visual tool for organizing your own money system. It’s super helpful for both your business and personal finances. I’ve talked about the how-to of money mapping quite a bit on this blog, so I won’t go into detail. I recommend reading my full series on money mapping, and especially How to Use Money Mapping to Give Back.  The big pro of money mapping is that you can visually parse out how you will allocate for giving money. Whether it’s coming out of your business finances, your monthly living expenses, or you’re saving a big sum, creating a money map helps you see that and stick to it.

Want to Give? Get Organized!

The bottom line here is that donating money from a solid financial base requires getting organized. You need to go over your financial priorities and see what kind of money you have to work with. From there, you can make an informed and generous decision about where to put your money, without putting yourself in dire financial straits. I hope you found this article helpful. Currently, I have a few openings in my practice for some personal finance coaching clients, so if you’d like to work closely on your personal finances and develop a giving plan with support, reach out to schedule a free consultation!

 

 

Happy giving!

☮

Angela

This blog post is a re-publishing of the original article, “How to Make Donating Way Easier on Your Finances,” published in November 2020. For more articles on this topic, check out the “giving” tag. 

By |2021-06-17T11:52:31-07:00June 17th, 2021|Categories: Personal Savings, Personal Spending|Tags: , , , , , , , , , , , , , , , , |0 Comments
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Why Your Finances are the Key to Self Care

We know that self care is important. We know it’s important to do things like unplug from electronic devices, get exercise, and treat ourselves. But oftentimes the conversation about self care can leave out one important aspect: financial self care.

Financial self care is the foundation of all other self care in your life, so it’s a shame that it gets forgotten! By financial self care, I mean doing the routine maintenance and occasional projects to keep your finances in good order. Things like reviewing your spending plan on a weekly basis and planning for irregular expenses are key to other aspects of your life. When your money is in order, it is so much easier to care for yourself. Your physical, spiritual, and mental health benefit when you are confident in your financial situation.

What are some areas of your life that need more care? Take a moment to really think about this. Perhaps you want to be able to purchase organic food or pay for a medical treatment. Maybe you want the ability to work less and turn down certain engagements. Or maybe you would benefit from seeing a therapist or spiritual worker.

Underlying all of these self care actions is a financial decision. When you engage in a regular financial self care routine, these decisions get easier. When you know whether you’ve met your spending limit for a category, deciding whether or not to spend the money to get that massage is much more simple. Regular financial self care takes that guesswork away and helps you get clear.

Financial self care involves engaging in a process of setting financial goals and working out what you actually want to spend your money on. When you’ve got this worked out, it makes it much easier to decide what to spend money on in order to take care of yourself. This process can illuminate what you really need and want. Therefore, it can deeply assist your overall journey of self care.

9 Secrets to Financial Self Care Book Cover

I created a full e-Book on the concept of financial self care, which you can download by clicking here. This e-Book goes into depth on many different strategies to infuse your days with financial self care and build a solid routine for yourself. If you are interested in exploring how financial self care can support your life, I recommend giving it a read!

☮

Angela

By |2021-04-08T14:27:43-07:00December 8th, 2020|Categories: Financial Clarity, Money Mindset|Tags: , , , , , , , , , , |0 Comments
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How to Make Donating Money Way Easier On Your Finances

This time of year, many of us are thinking about giving. Traditionally, we come together to be thankful for our blessings and share generosity. While many aspects of the holiday season will look different this year, your giving doesn’t have to! I know many kind and generous people who wish to give money to organizations or causes they support, or simply other people in the community who are in need. However, sometimes being clear on how much you can really afford to donate is difficult.

To really clear this up, you need to develop a solid financial base for yourself. I’m talking about using a spending plan, a savings plan, and money mapping to really get clear on where your money is going. Let’s look at how each of these three tools can help you give way more easily:

Spending Plan

First, you need to know how much you’re spending and where it’s going. Take a walk through your income and expenses and figure out how much you’re saving, if you are saving. The point of developing a spending plan (also known by the less-fun-sounding-term “budget”) is to get clear on what your spending is like right now, and how it compares to your income. When you look at this, you can see what your spending priorities currently are, and you can start to think about that critically. Do you really want to eat takeout food every week, or would you rather be able to donate that $35 to a conservation campaign like Protect Juristac? Looking at your spending and weighing your priorities can make room for the giving you want to do. To develop a good spending plan, check out my article with ideas and strategies here.

Savings Plan

Saving money gives you serious options, whether you’re saving for an emergency fund or a big purchase. You can also decide to dedicate a portion of your savings directly to giving. Maybe, you decide to save 5% of your income every month and donate it to the COVID-19 Hopi Relief Fund at the end of the year. Whether the giving comes out of your savings or your spending plan, having both gives you a fuller picture of how you can spend, give, and save for your goals. You can read more about creating a savings plan for yourself here.

Money Mapping

Once you’ve got the spending and the saving figured out, you can put it all together into a money map! Money mapping is a visual tool for organizing your own money system. It’s super helpful for both your business and personal finances. I’ve talked about the how-to of money mapping quite a bit on this blog, so I won’t go into detail. I recommend reading my full series on money mapping, and especially How to Use Money Mapping to Give Back.  The big pro of money mapping is that you can visually parse out how you will allocate for giving money. Whether it’s coming out of your business finances, your monthly living expenses, or you’re saving a big sum, creating a money map helps you see that and stick to it.

Want to Give? Get Organized!

The bottom line here is that donating money from a solid financial base requires getting organized. You need to go over your financial priorities and see what kind of money you have to work with. From there, you can make an informed and generous decision about where to put your money, without putting yourself in dire financial straits. I hope you found this article helpful. Currently, I have a few openings in my practice for some personal finance coaching clients, so if you’d like to work closely on your personal finances and develop a giving plan with support, reach out to schedule a free consultation!

 

 

Happy giving!

☮

Angela

 

By |2021-04-08T14:35:37-07:00November 16th, 2020|Categories: Personal Savings, Personal Spending|Tags: , , , , , , , , , , , , , |0 Comments
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All About Oversaving, And Why Overcoming It Can Strengthen Your Business

Often issues with money stem from not having enough – so when you hear the word “oversaving,” it might not sound bad. However, oversaving can be a serious issue that may be blocking the potential of your business. It may also point to anxieties that need to be resolved. Let’s take a look at what oversaving is and what you can do to overcome it.

What Is It?

If you experience anxiety or guilt over spending money, even on basic necessities, you may have oversaving tendencies. You might struggle to spend money on your business or operating expenses. Alternatively, it might be hard for you to spend on something other than reinvesting in your business. Or, you might have a hard time parting with any money know you could save it for retirement or business emergencies.

Oversaving both stems from and enhances anxiety, stress, and burnout. It often comes from a fear of scarcity. While saving money is an important skill, if it’s taken to an extreme, it can keep you from spending money to solve urgent problems in your business and your personal life.

What Can You Do About It?

Saving money is a great habit, but the key to overcoming the oversaving habit is to get strategic about your saving. Rather than living in this panicked feeling of “I have to save every dime I possibly can,” create some money systems! Coming up with savings goals, establishing a spending plan, and automating your money are all great ways to introduce strategy and systems. 

Savings goals can be especially helpful, because they can lend purpose to all that saving, but they also create an end point you’ll eventually meet. Limiting and directing your savings in this way can help curb the habit and assuage your anxieties. When you use the Profit First system, you put aside money to pay yourself first, but you also save for taxes, put aside money for operating expenses, and also distribute profits every quarter, which are meant to be spent by YOU so you can reward yourself for your hard work. If you’re interested in learning more about the Profit First System, check out the first 5 chapters of the book here.

Doing some emotional work around money can also really help you clear up your oversaving. I recommend reading Bari Tessler’s The Art of Money for more ideas about this. She helps you unpack your feelings around money and combining the practical with the emotional. If you’re interested, check out my book review.

Oversaving can be a sneaky habit, difficult to catch and overcome, but I believe in you – you can do it! And anyway, saving is so much more effective when it’s done in order to meet a goal. If you enjoyed this article, I suggest looking into Profit First. If you want to chat more about these ideas and take a look at your money, you can take a look at my service packages and book a call. Doing a year-end review could help you identify a couple goals to save for!

☮

Angela

Photo by Sharon McCutcheon

By |2022-01-12T10:57:45-08:00December 19th, 2019|Categories: Personal Savings, Personal Spending, Profit First|Tags: , , , , , , , , , , , , , , |0 Comments
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To Increase Your Earnings, Take Action

So, you’ve shifted your mindset: you see the potential for abundance and your life and you’re ready for the cash to roll in. But now what? It’s time to take action. By getting the wheels in motion, you get closer to earning what you deserve. This is the second in a series of posts on the seven strategies used by high earning women Barbara Stanny interviewed in her book Secrets of Six Figure Women. You can check out the first post on shifting to an abundance mindset here! According to Barbara’s insights, here are a couple action steps you’ll want to take. 

Step One: Get Clear

The first step is to get clear on where your finances are right now.  You need to know what you have in the bank, how much you are spending monthly, and what and whom you owe.  If you are currently ignoring this information, you cannot move forward until you face these numbers.  In her book, Barbara gives many examples of women who have changed their patterns with their finances.  Many had to stop overspending in various areas, some had to pay off credit card debt or stop using credit cards altogether.  But they all had to first examine their current behaviors and then think about where they wanted to end up and make the decision to make change. If you’d like a guide for this step, check out my post Three Steps to Financial Clarity. 

Step Two: Make a Change

Making changes may include trying new strategies with your spending and saving.  It may mean not using credit cards at all, or seeking out someone to partner with to make change, like a money buddy or accountability partner. One of the women interviewed actually set up a system of saving one third of her income, setting aside one third for taxes and living off of one third.  This may not be a feasible option for every income level, but setting up and automating some percentage of saving is a great place to begin. You can read my article about automation for more resources. The author points out that when you do make a change, “each step builds to the next, increasing confidence, competence and resources.” With that in mind, the best thing to do is pick an idea, try it, and see if it does some good for your financial situation. 

To Increase Earnings, Take Action title imageThree Keys

Once you’re on your way to making changes, it’s good to know the keys to managing your money. Barbara points out three key steps to successful money management: spend less than you earn, pay yourself first, and then put your money to work.  This last step is often the trickiest. Many people are tripped up by fear when it comes to investing and building wealth. That’s why we’ll going in depth about it next week, when we’ll talk about wealth building. I haven’t talked a whole lot about this here, beyond a few ideas about retirement prep, so I’m excited to get more into it!

If you think you’d be able to take more action with the guidance of an accountability partner, I’m always here to help. Take a look at my services, book a call, and let’s have a chat!

☮

Angela

By |2019-05-15T19:10:44-07:00May 15th, 2019|Categories: Financial Clarity, Personal Savings, Personal Spending|Tags: , , , , , , , , , , , |0 Comments
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Three Steps to Financial Clarity

3 Steps to Financial Clarity: At Peace With Money

As the holidays set in and the mad rush of preparation begins to slow, you might find yourself with a little time to reflect on your year. Why not take the opportunity to reflect on your finances? Your money, much like all the other pieces of your life, deserves your attention, thought, and critical eye. This exercise is meant to lead you to financial clarity. By completing it, you’ll gain a better understanding of what you want from your money, and how to get there.

Step 1: Define Your Destination

What’s your destination with your money? What are you planning to do with it? Is there something you’re saving up for? You might have vague plans, a well-defined roadmap, or nothing at all. This is the step where you can dream and imagine that destination. If you already have one in mind, check in and make sure it’s where you want to go. Make sure you investigate any current money goals you might have to make sure they really align with your desires. If you don’t have any goals, think of some you might like to adopt!

Step 2: Drop Your Pin

Pinpoint your current location. In other words, figure out where you are now financially.  It’s time to get clear and honest about what you have, what you owe and where your money is going each month. Use this step as an opportunity to total up your expenses and debts and track your recent income. Leave no bill unturned! If you want further instructions on this step, I recommend checking out my article on creating a spending plan, specifically the section on analyzing your expenses. 

Step 3: Plan Your Journey

3 Steps to Financial Clarity: At Peace With MoneyNow that you know where you are and where you’re going, it’s time to figure out how you’ll get there. This is the step where strategy comes in. Based on all the information you’ve already looked at during Step 2, you should be able to determine what will help you get to your destination. Whether that’s saving more money, paying yourself first, cutting out certain expenses, increasing your income, or a whole host of other ideas, identify your moves and decide when you’re going to make them. 

This process may take you a little while to complete, but it will ultimately bring you to a place of much greater clarity when it comes to your finances. This exercise can be applied to personal finances but it can also be applied to your business finances. I hope this season of reflection serves you well.

If you need any assistance looking through your finances, I’m happy to help you reach a place of clarity. Schedule a call with me!

☮

Angela

By |2018-12-19T00:43:10-08:00December 19th, 2018|Categories: Financial Clarity, Money Mindset, Personal Savings, Personal Spending|Tags: , , , , , , , , , , , , , , , |0 Comments
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Young and Thrifty: Creating a Spending Plan

How to Create a Spending Plan: At Peace With Money

Creating a spending plan, also sometimes known as a budget, can be a very important tool for getting a handle on your finances no matter where you are in life. In my last Young and Thrifty post, we briefly touched on budgeting as a way to encourage saving habits. Today, I want to look more closely at 3 different types of spending plans. Maybe you’ll find one that works for you! But first, the budgeting basics:

Analyze Your Expenses

The first step to creating almost any spending plan is to analyze your expenses. Figure out what your fixed expenses are, like rent or mortgage payments, transportation costs, food, etc. These types of expenses are things you really need that tend to cost the same amount every month. After you’ve confirmed what your fixed expenses are, you can analyze the rest of your spending habits and determine which of your expenses are flexible, and not as necessary as your fixed necessities.

Once you’ve evaluated your finances in this way, you can start to take charge of your spending using various strategies.

Categories

The most common budgeting strategy is to divide your expenses into specific categories and assigning designated not to exceed amounts for each category. For example: “Food, $200/month, gas, $150/month, etc.” Doing this can help you establish your monthly living expenses and also help you understand how much you spend on each category. If you wish to cut down on your spending in a particular area, this may be a useful strategy for you.

Set Amount for Flexible Expenses

Another strategy that is helpful when you’re really focused on saving is setting aside a set amount of money for all expenses that lie outside of your fixed necessities. When my oldest daughter was setting a budget while saving for her road trip, she set aside $100 a month for all expenses that weren’t fixed necessities. This might be tight for some, but setting an amount in this way is a very simple budgeting tactic that can encourage you to make your spending more intentional.

Rewards

A third tactic that can help you create a spending plan you’ll stick to is to set aside rewards for yourself. For example, if you have $500 to spend on a certain monthly expense, and you manage to only use $480, you can use that extra $20 to reward yourself. This can be applied to your overall monthly expenses or within certain categories. One of my daughters has found this strategy very motivating and usually ends up using her reward money on ice cream.

Resources

There are two digital resources I can recommend for anyone looking to create a spending plan. Mint and You Need A Budget are both digital budgeting software systems that will help you set up and track your monthly budget. From my personal experience, I enjoy Mint, and my family uses their free version. Amber Dugger really appreciates YNAB and uses it with her clients.Creating a Spending Plan: At Peace With Money

Though this article mentions only a few strategies, budgeting and spending plans can be as simple or complex as you need them to be. I encourage you to do more research if you’re interested. I recommend this article from Practical Money Skills and this podcast from Jen Hemphill as two helpful resources. In a later post, I will be putting together a list of some of my favorite resources for financial self-education.

I hope you find these spending strategies useful. Stay thrifty!

☮

Angela

Images:Camille Orgel, Unknown

By |2018-06-04T19:29:35-07:00June 4th, 2018|Categories: Financial Clarity, Money Mindset, Personal Spending|Tags: , , , , , , , , , |1 Comment
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