Create a Spending Plan

Prefer to listen rather than read? Pair this post with Deliberate Money Moves Podcast: Create a Spending Plan.

If you want to do everything you want in life and then die with a dollar in your bank account or whatever amount you want to leave your kids, there is a simple equation.

It’s what you have plus what you make minus what you spend.

These three things will determine whether or not your financial life is successful:

1. What you have
2. What you make
3. What you spend

Know Your Spending

Now, I bet you know exactly what you have and what you make. But do you know what you spend?

For some reason, we are wired to not pay attention to our spending. Maybe we take it as a sign of personal success that we don’t need to look at our spending, but that’s flat wrong.

Spending is one third of what is going to determine your financial success, so it definitely pays to pay attention to it.

How to Create a Spending Plan

Take a look at your past spending to understand the cost of your lifestyle. Use that to build a plan for your future spending and don’t forget to add anything new that you want to do in the future.

This spending plan will allow you to both know and understand where your money is going. Once you incorporate it into a longer term projection, you will feel good that you are on track to get where you want.

Here’s this week’s Best Financial Life tip of the week: Create a Spending Plan.