Spending Plans are different than budgets in that they allow us to balance our desire to save more for the future (by investing in a secure retirement plan, an emergency savings fund, a down payment for a home and/or funds for a much needed vacation) with our desire to enjoy our lives now, in a way that supports our values and gives us freedom of choice.  A Spending Plan, typically made at the end of the month, involves creating guidelines and making intentional choices about where we’d like our money to go in the upcoming month.

1. Create a spending plan based on your spending history. Look at your spending for the previous month or the past couple of months by going through your bank statements, check registers and credit card statements.  HINT:  If you know you won’t take the time to gather past statements and to review your actual spending history you can make an educated guess at the amounts that you think you realistically spend in each category.  Then try to adhere to your new spending plan for a month.  Throughout the month add any bills/expenses that you forgot. Make adjustments to your spending categories at the end of the month – if you discover that you’re numbers weren’t realistic.

2. Divide your spending into these four broad categories: 1) fixed expenses, 2) variable expenses, 3) debt payments (don’t include your mortgage in debt payments–instead record it under your fixed expenses. You will, however, want to record your car loan under debt payments) and 4) savings.  You might not have any money going towards savings right now, but you’ll still want to retain this category to serve as a reminder of your savings goal.

3. Assign numbers to your spending plan based on your spending history, using your four broad categories. Itemize your individual expenses below each broad category.  For example, under the category of fixed expenses you’ll list: mortgage, health insurance, phone bill, car insurance, utilities, etc.  Record all your expenses on the left side of a piece of paper and on the right side list your income, your partner’s income and any income from other sources, and then get a total for all your income sources.

4. Make sure you work your numbers until your expenses equal your income so that your income minus your expenses equals zero. If you end up with an extra $200 after you’ve subtracted your expenses from your income, don’t just leave it as an extra $200.  Assign the $200 to a spending category like savings.  In order for your spending plan to really work you’ll need to refer to it once a week or at the very least, twice a month.  Mark out any expenses that have been paid and calculate how much money you have remaining to make sure you have enough money to make it through to the end of the month.  Your spending plan should have coffee stains on it and be well worn by the end of each month!

Simple Action Steps You Can Take Now:

1. Print off this article and put in on your refrigerator or tape it to the kitchen wall.

2. Ask your spouse in a very loving and kind way if he/she would be willing to set up a time to talk about creating a spending plan. Just know that they might feel a little defensive at first.  Tell them that you’re not out to control their spending but that you’d like to sit down and talk about how the two of you could achieve your financial goals together.

3. Determine a specific time and date to create a spending plan. Write this on your calendar. Remind your partner the day before so that it’s top of mind for both of you.

4. If your partner doesn’t want to do this – don’t let that deter you! Create a spending plan on your own and then show it to your partner and see what kind of tweaks and changes that they want to make – remember both of you have got to agree to the spending plan  – otherwise your partner won’t have the emotional “buy-in” to stick to the spending plan!

5. Collect your last month of credit card and bank statements and have these ready in advance of your spending plan conversation.  After you’ve completed these steps you’re ready to create your new spending plan with your partner!

I found myself incredibly freaked out when I arrived back home with my new husband.  I desperately wanted to discover wealth building secrets so that I could not only take practical financial steps but so I could attract wealth and money as well.

During the start up phase of my private coaching practice I decided to take up a side job of landscaping gardens (i.e., read between the lines — I had acquired a part-time job as professional weeder for my mother-in-law of all things!).  I would wake up in the morning and wonder if were even possible to have a successful career as a business owner and get out of the crazy debt mess that we had created.

And we did – but it didn’t happen over night. There were times when we felt like the proverbial fish out of water.  There were many times my husband and I felt discouraged and disheartened.

I see clients in my private practice with the familiar sense of overwhelm that I had experienced.  They feel stressed because they are burdened with student loans and credit card debt and back-taxes.  Others are living paycheck to paycheck with multiple overdrafts on their bank accounts.  Still others are searching for more meaning, purpose and direction in their lives as they embark on new careers.

Many people experience the voice of fear and doubt in their head – yet in spite of this, they persevere. After building a successful career and climbing out of credit card debt I now realize that a big part of my/our success was in “doing the inner work.”

In order to win in life we must be willing to do the inner work.  Success isn’t just about achieving a specific desired outcome.  It’s about shifting our mindsets so that we achieve our desired outcome.   This applies to any struggle or challenge that you’re having – not just the financial challenges.

In order to achieve your desired goal you need to:

1. Get determined. I see people all the time who lack determination. They talk the good talk but they really don’t want to take action and do something about their situation.  What they really want is to vent and complain.  And then there are others who have the burning drive and conviction and you just know that they’re going to “make it” in spite of the many obstacles they encounter.

It’s the inner drive that keeps them going when the going get tough, when the bills pile up, and there’s not enough money coming in.  It’s the inner determination that keeps them pushing until they’ve transformed their failures and struggles into successes.

2. Allow yourself to be a beginner. This is such a tough one for many of us.  When we’re learning a new behavior (like balancing our checkbooks, tracking how we spent money, creating a spending plan, having Financial Dates with our partners, getting rid of debt or embarking on a new career) we forget to allow ourselves to be a beginner.  We expect ourselves to do it perfectly and then act surprised and get discouraged when we fail.

You’ve got to be patient with yourself.  It’s like the metaphor of learning how to ride a bike for the first time.  It feels awkward at first.  Remember to be gentle – you’re not suppose to know what you’re doing!

You will fail at times.  And you know what?  That’s okay – Expect it! All you need to do is stay the course until your old limiting behaviors have developed into strong, powerful habits.

3. Have a faith. It’s okay to get discouraged from time to time, but in the end you must find a way to access faith and belief in your ability to turn your situation around. If you’re frustrated and depressed all you’ll see is a dismal, gray future.

If you’re able to shift your thinking from “I’m stuck and I’ll always be stuck,” to “Anything’s possible.  It’s happened for others and it can happened for me as well,” then you’ll access new insights and creative solutions that you couldn’t have seen from your negative state of mind.

If you do nothing else but implement these three inner success steps you will succeed eventually!  Because financial success really is an inside job.

Set up a bank account for your fixed expenses and variable expenses.

Set up two checking accounts at your bank:  one for your fixed monthly expenses for things like your mortgage, health insurance, phone bill, car insurance, debt payments that your paying on (car loans, student loans), utilities and your savings.  Set up the other checking account for your variable expenses: things like groceries, gasoline, dining out, recreation, clothing, medical expenses, household purchases and miscellaneous.

Refer to your spending plan to calculate how much money needs to go into your bank accounts each month.  Make it a priority to put money into your fixed checking account first and your variable checking account second.  By having two separate accounts for your fixed and variable expenses you’ll never spend money that was intended for a necessary living expense like your mortgage on a fun unnecessary expense like dining out.  This system also works well for self-employed professionals–all you do is transfer money into the appropriate fixed or variable bank account as it comes in. 

Create a spending plan based on your spending history. Look at your spending for the previous month or the past couple of months by going through your bank statements, check registers and credit card statements. Divide your spending into these four broad categories: 1) fixed expenses, 2) variable expenses, 3) debt payments (don’t include your mortgage in debt payments–instead record it under your fixed expenses. You will, however, want to record your car loan under debt payments) and 4) savings. You might not have any money going towards savings right now, but you’ll still want to retain this category to serve as a reminder of your savings goals.

Create a spending plan based on your spending history, using your four broad categories. Itemize your individual expenses below each broad category. For example, under the category of fixed expenses you’ll list: mortgage, health insurance, phone bill, car insurance, utilities, etc. Record all your expenses on the left side of a piece of paper and on the right side list your income, your partner’s income and any income from other sources, and then get a total for all your income sources.

Make sure you work your numbers until your expenses equal your income so that your income minus your expenses equals zero. If you end up with an extra $200 after you’ve subtracted your expenses from your income, don’t just leave it as an extra $200. Assign the $200 to a spending category like savings. In order for your spending plan to really work you’ll need to refer to it once a week or at the very least, twice a month. Mark out any expenses that have been paid and calculate how much money you have remaining to make sure you have enough money to make it through to the end of the month. Your spending plan should have coffee stains on it and be well worn by the end of each month!

I remember many, many years ago my husband and I struggled with getting rid of debt, getting our finances organized and creating a clear financial plan.

We decided to have weekly dates to get our finances in order. We came to refer to these meetings as our Financial Dates®. We didn’t really have a clue as to what we were doing. All we knew was that we needed to give our finances undivided attention.

An amazing thing happened during these Dates; instead of finances becoming a source of divisive tension that pulled us apart, they became the glue that held us together as we became a unified team – as we focused on the single goal of getting out of debt. We would sit down, create a list of agenda items that we wanted to cover and proceed through the list until we were done.

I still recall the day that we excitedly marked through our last credit card payment on the chart we had created. We had finally arrived. We were free. We had been given wings to fly.

There is power in giving your finances undivided attention.

Take the steps to learn how to have a financial Date® with your spouse to become your extraordinary dream in your financial life.