When it comes to creating a money plan, people (coaches, clients, advisors alike) are particular about the term they use. Some are very strict about not saying “the money management name that should not be named” (aka BUDGET) in fear that it will invoke feelings of anxiety and stress. Some prefer more positive sounding terms like “Rich Life Plan” because it gives the feeling of hope and optimism. You could call it “Bob’s Don’t-go Broke Plan”, but no matter how you say it, every person should have a strategy for their cash flow. Not having a strategy is like doing a high-wire act without a net…it’s just not safe!
So why don’t people create a Budget?
According to most surveys, most people find creating a money plan as unnecessary or just too complicated. They see them as a “kill-joy” or just too time consuming to maintain. It’s baffling, though, that we will devote HOURS surfing Amazon or walking our favorite department store looking for the best buys and yet, we won’t devote a few hours a month on a money strategy. Seems backwards, doesn’t it?
How to pick the right Money Plan for you!
There are so many plans out there that it’s mind-boggling! The good news is that people are starting to understand that money plans are personalized and specific to their lifestyle. Meaning…one size does NOT fit all! Your plan doesn’t have to look and work like your neighbor’s plan. It only needs to work for you! YAY! So, how do you pick the right plan? It comes down to how you naturally operate. Do you like to deep dive on your finances and find every single penny? There’s a plan for you! Do you want to spend as little time as possible in a spreadsheet and just want to make sure you’re on track. Great news! There’s a plan for you too! Check out these plans and see which one resonates with you:
- Zero-Based Budgeting
- Income (minus) bills, expenses (needs), wants, savings = $0.00
- You want the bottom line to say $0.00 because that means you’ve given every dollar a job to do.
- This is great for maximizing every dollar you earn.
- 50/30/20 Plan
- 50% of your total income goes to your needs, 30% towards your wants, and 20% towards savings.
- Helpful for those who want a less aggressive looking plan, but still does the job.
- 75/15/10 Plan
- 75% or your total income goes towards living expenses, 15% towards investing, and 10% towards savings.
- As above, helpful for those who want a less aggressive looking plan, but still does the job.
- The Envelope System (aka Cash-Stuffing):
- Set a spending limit for each category in your budget (groceries, gas, etc) and set aside the cash for that category in an envelope.
- You won’t need to track all your expenses because once you’re envelope is out of cash, you can’t spend anymore in that category. Very helpful for curbing spending habits.
- Savings First Plan (aka Pay Yourself First):
- This plan prioritizes savings above all your bills and expenses.
- This is helpful for those who need to build-up an emergency fund or certain savings buckets.
Your values take center stage in your plan!
Did you notice the above plans were all pretty similar, but slightly different? That’s because what drives your plan is YOU! What are the areas you want to prioritize? You could like the 50/30/20 plan but change it to reflect a 40/30/20/10 plan (40% needs, 30% wants, 20% savings, 10% investing). Pretty cool, right?!
If you need some help with your money plan, I’m here for you! Start with a no-cost 20 minute Discovery Call and let’s see how we can work together to give you an awesome plan!
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