Most people live paycheck to paycheck, and spend what they want whenever they want. But if you keep up that pattern long enough, you’ll soon discover that the money runs out before you’ve paid all the bills, and there is never any left over for emergencies, special purchases or holidays. To get control of your household spending and start saving you will need to set up a household spending plan.
A Spending Plan
The thought of having to stick to a spending plan might make you cringe. It sounds restrictive and boring. But if you are serious about creating wealth, a spending plan can actually give you freedom. You will have control over your finances, know where your money is going, and have a plan to reach your financial goals. Not spending on a few things that you can do without right now means you will be able to spend on larger, more important purchases in the future.
Here are some easy household spending plan strategies you can use to get started.
Find out how much you earn
The way you’re paid can determine how you spend your money each month. If you’re paid on a weekly basis, you can calculate your spending plan based on four paychecks a month. That means you’ll have four extra checks throughout the year to help with extra expenses.
If you’re paid bi-weekly, you can calculate your spending plan based on two paychecks a month, and have two extra checks throughout the year.
If you’re paid monthly, calculate your spending plan based on the monthly amount. You won’t have extra checks throughout the year, so you’ll need to be careful in budgeting for the extras. For those who aren’t paid regularly, figure out your annual income and divide it by 12 to determine your monthly income.
Track your expenses
Your fixed expenses will be easy to figure out. These are the items that stay the same from month to month, such as your mortgage, car payment, and the like. Your other expenses can be trickier to calculate. To find out how much you really spend in a month, carry a notebook with you and write down everything you spend for the next 30 days. This will tell you how much money you’re spending, and where it is all going.
In part 2 I’ll show you the next steps in How to Create a Spending Plan (or Budget)
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
