Keys to Sticking to a Long-Term Plan
I believe that the first step to taking control of your finances is creating a budget. Don’t we all need to feel in control of this area so that it does not induce unnecessary stress to our household members if the month is running longer than what our funds can cover?
For some of us, we take up our positions playing the field in defensive mode, operating not to lose instead of strategizing how to win – and there’s a big difference.
It may seem like a recurring theme when we find ourselves holding our breath for any unplanned expenses that reveal itself in the last minute, especially those tied to our kids’ school or activities, or a surprise caregiving expense. We cross our fingers in hopes to repel any real emergencies that dip into our savings. There are also times we pay the cost of convenience, whenever we justify eating out because we’re just too tired to cook at the end of a rough day at work.
When you know there’s no wiggle room in your finances, we need to be intentional with our decisions that reflect in our bank accounts. Author John Maxwell points out that a budget is simply telling your money where to go, instead of wondering where it went. We can own that voice that dictates where we’d like our hard-earned money to go, and reclaim control. But we must face it head on and tackle the numbers in the page and make them behave.
I have been creating and implementing a budget for the last decade up to now. It has become an automatic monthly discipline and one of my favorite things to do. Though I’d be honest, this was not the case when I first started. I was scared and overwhelmed back then. But it has become less daunting after doing it a few times, and eventually became a pleasant experience when we started seeing the joys of our small wins.
Every single month I prepare a fresh budget and present it to my family so that we are all on the same page. Doing so have allowed us to hit our financial goals like paying off all of our credit cards, beefing up our savings, and valuing peace of mind every day that come along with that.
A budget may be just numbers to some, but for me, it is a heart tale. If you’re not conscious, logic is quickly trumped by feelings when it comes to spending money whether we care to admit or not. So I honed in on the behavioral aspect to tie my mental faculties to keep me on track with implementing a budget that works and is sustainable in the long-term:
Understand this equation: Inflow minus outgo equals zero
Do not spend more than you earn. When you create a budget, you take what goes in your account, and then you put a name for each line that gets taken out of your account. You do this exercise in advance before the month begins. Outgo includes all of your monthly obligations and living expenses until you’re down to zero. Zero – and not a negative number that puts you on a deficit. Make adjustments appropriately as it’s hard to get it down in the first try.
Assess your lifestyle
Can you really afford the way you are living? Are there big or small sacrifices that you have to make for now to put your family in a better financial situation? Do you really need cable when you can opt for cheaper TV streaming services? Do you really need novelty macchiato when you can brew coffee at home? Your answer signals what your priorities are.
Embrace a vision that fires you up
If money were no object, what is it that you want to pursue or do? Imagine a version of your life where you are not held back by your limited resources. Open yourself up to possibilities, and then ask yourself how you would translate your daily activities to align with your intention. Let that vision guide your commitments.
Set a goal and pay attention to the sensation when you hit that goal
For me, it’s an immersion of all my senses tuned to a grand orchestra piping sonnet and melody harmoniously building up to an extravagant chorus. Goosebumps and tears are involved here, or a huge smile from ear to ear that cannot be erased.
Whether your goal takes the shape of something small like packing a brown bag each day so you do not spend lunch money; or you boot a bigger goal of paying off your mortgage early… You set the bar of how you want to celebrate your wins. Emotions surge to celebrate these victories, and you crave to hit your next win because it just feels really, really good.
Recognize the power you possess in your hands today to change your family tree
There’s a pearl of proverbial Hebrew wisdom that goes: “A good person leaves an inheritance for their children’s children.” Your actions do not merely affect you today, but it stretches out to generations. You can teach healthier concepts about money, and pivot from a place of scarcity to abundance.
Conduct a recurring ‘After-Action Review’ of your budget
Yes, a budget is a start. But a budget is vastly different from your actual spending. Did you stick to the plan?
I evaluate the accuracy of my execution and compare the projected versus actual figures. I download all the transactions from Online Banking, and I put a user-defined label for main and sub-categories for each transaction. Then I create my own personal reporting with pivot tables and bar charts.
I pay close attention to our top 3 spending categories and cross-check it with my long-term goals. If I say that charitable giving is important to me, am I true to my word – and is that reflected in my spending? The quickest gauge for what’s important to a person is the way they spend their resources.
I challenge you to introduce new routines in the way you manage your finances. Be deliberate in your analysis of your spending. You will be surprised at how revealing and insightful this information is. Creating a budget might even make you feel like you got a raise.We cannot drift our way into financial health. It takes vigilance and intention to win with money. Click To Tweet
We cannot drift our way into financial health. It takes vigilance and intention to win with money. Imagine that you have the freedom to be who you really are and seek what you eagerly desire in life without any financial anxiety or worry. Ask yourself this question: What would you like the power to do?