To make matters worse, they still have necessities to pay for: groceries, gas and utility bills, not to mention credit card payments. Somehow they manage to be surprised when once again there isn’t enough money to cover the necessities. So, they turn to the good ole’ credit cards or take out loans from friends and family to make up the difference. They heave a sigh of relief and say, “Thank goodness, we made it through another month.”

But in truth, they haven’t really made it. They’ve only acquired more debt that will have to be paid off in the future—more debt that continues to quietly whittle away at the hard-earned paycheck they bring home each month.

“But I Don’t Do That!”

“That’s not me,” you say, “I don’t borrow money from friends or family, and besides, I pay my credit card bill off in full each month.” And I say, “wonder­ful, great… but, is any of your money going towards important things like your retirement, emergency savings or saving up for your big dreams?” If you are like many people, I would guess that it probably isn’t. I’m willing to bet that all of your income is going towards supporting your current level of lifestyle as well as debt.

What I’m talking about is spending money on things that make you feel good in the moment but keep you in debt and without sufficient retirement or emergency savings. Maybe you like to buy nice clothes, cool gadgets, new music, a weekly manicure or magazines.

If you do manage to put money into your savings account you may likely be one of those people that ends up having to dip into it regularly after discovering that you don’t have enough to make it through the month. Many of us walk around in what I call “blissful, financial ignorance.” Another appropriate word for this is denial.

You also need to become aware of your spending patterns. When I speak of tracking your spending, I’m talking about using a system that tells you where your money is going (how much you spend each month for things like groceries, transportation, utilities, gifts, dining, etc.)

Awareness is the critical first step towards changing our money behaviors. If we don’t have a clue as to where our money is going, how much and for what, we won’t have the necessary knowl­edge to motivate us to change our behaviors.

Why should you be motivated to spend less money on magazines, lattes or clothing, if you don’t know how much you’re actually spending on these items each month, and how much you have left over, if any, for savings or paying off debt? Because real numbers inspire real motivation.

Remember: if we always do what we’ve always done, we’ll always get what we’ve always got.

This means if we continue to unconsciously spend money the way we’ve always spent it, it’s no surprise that we’ll continue to have in­creasing credit card debt and little or no money in our savings accounts for our important financial dreams and goals.

We may experience a fun, carefree lifestyle. But it is a lifestyle that is acquired on borrowed money that we’ll have to pay extra for, both now and long into the future–a lifestyle devoid of the financial security and deep peace of mind that all of us desire.

* Are you frustrated because you’re not able to put more money towards savings?

* Do you feel like you don’t have a clue as to where your money is going to each month?

* Would you love to have a lot more money coming in each month?

I am hosting a FREE teleseminar so you can finally succeed in making more money, getting rid of debt and saving more in 2011! “The Secrets To Ending the Stress and Struggle of Not Having Enough Money… So You Get Rid of Debt, Save More and Make More!” Join me on Thursday, January 27th, to learn more about personal budgeting and financial help for married female entrepreneurs. Click here to get more info and sign up

Personal Budgeting – Budgeting Tips So Your Budget Works For YOU!

Spending Plans are more effective 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.

I encourage all my couples’ clients to create a monthly spending plan so that they can plan in advance of each month exactly where they want their hard-earned money to go—and I want you to do the same.  But if creating a spending plan is a new process for you, it’s very important that you be patient with yourself and your partner.  In the first couple of months you might discover that you and/or your partner are not able to stick to your spending plan.  Perhaps you’ve even gotten into argument over it and now you’re ready to just ditch the whole thing. Don’t do this!  Read the 4 tips below so that you can make sure you’re taking all the right steps to creating an effective spending plan.

1. Give yourselves permission to NOT be perfect—just be committed and keep coming back! Chances are good that you won’t follow your spending plan perfectly during the first several months–that’s okay!  It took me and my husband many months before we were actually able to stick to our spending plan.  And our first spending plan took us FOREVER to create and agree on.  It felt like a very foreign process to us.  Be patient with yourselves and know that once you become familiar with the process, it won’t feel as awkward or take as long to create.

Know that it’s not all going to be “peaches and cream”—there will be some arguments and that’s okay! Getting into an argument over how much one of you spent doesn’t give you permission to give up and claim, “This isn’t working!”  It works—but you have to be willing to keep showing up even when you get frustrated.  Remember, your spending plan will work for you IF YOU WORK IT!

2. Use a Financial Freedom Tracking Book™ in conjunction with your spending plan. I’ve heard people complain that spending plans don’t work for them because they are “visual” people and they don’t have a clear sense of exactly where they’re “at” with their spending.  Here’s what you need to do:  Get a small notebook (4 x 6) and determine 3-5 categories that you have a tendency to overspend in.  Write in the category and the total amount you’ve budgeted for the month in that category.

For example, if you decide that you will spend $400 on groceries for the month—record the budgeted amount in your notebook.  Following each visit to the grocery store, record the date, how much you spent and the new subtotal.  Your entry might look something like this:

Grocery Budget $400                    $ Spent         New Subtotal

1-15-2010   Smiths                           $40               $360

1-20-2010   Albertsons                     $75               $285

You will need to save receipts and record your entries at the end of the day. You can keep your Financial Freedom Tracking Book™ on the kitchen table so both of you can easily access it. Keep a small bowl beside your notebook for receipts.  Decide which of you will do the tracking.  Just remember that both of you need to look at your book before you go shopping to see how much money you have available in your 3-5 spending categories.  Some common areas that people tend to overspend in are: clothing, personal expenses, recreation, dining out, groceries and children’s expenses.

3. Review and update your spending plan once a week–or, at the very least, every two weeks. Agree on who will update the spending plan each week so you can have an accurate picture of where you’re “at”. The spending plan should be written down a piece of paper and easy to read.

Keep your spending plan in the same place so both of you can see and refer to it throughout the week. You might consider posting it on your fridge or the kitchen table.

4. Review your spending history. If you are new to the spending plan process you will want to calculate your spending at the end of the month in your various categories to see how well (or poorly) you did. Review your spending with financial software like Quicken or Microsoft Money. Or if you don’t have financial software, just print off your bank statements online and determine how much you’ve spent in each of your spending categories.

In the beginning, my husband and I didn’t review our spending history at the end of each month.  We thought a spending plan was enough to keep us in check.  But when we finally did review our spending history we discovered that in one month we had actually overspent by $900—yikes!  Once we started tracking our spending history each month, we were able to cut back on our overspending.

Simple Action Steps You Can Take Now:

1. Buy a small notebook to use as your Financial Freedom Tracking Book™

2. Talk with your partner and determine which 3-5 categories you want to track in your notebook.  Record those categories along with the predetermined spending amount.  Make a commitment to save receipts and place in a bowl or container beside your tracking notebook at the end of each day. Decide if one or both of you will update the notebook each evening.

3. Decide which one of you will be responsible for updating your spending plan.

4. Decide who will run the numbers for your previous months’ spending so that you can calculate your spending history. Agree to buy Quicken or Microsoft Money, install it on your computer and give yourselves a few months to become familiar with it.

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!