Years ago (before any of the fabulous technology that we have now), those of us that did a budget had it all written down in a notebook somewhere, or on a scruffy, tatty piece of paper.
It was just a list of what we wanted/needed to spend our money on. Generally, the costs were itemised and then the “grand total” was at the bottom. As long as we didn’t go over the total, then “Happy Days”…. Sound familiar?
However, budgets don't work but this does... Let me explain.
So firstly, technology has improved immensely. Now you can use a fancy Excel Spreadsheet or even a fancy App on your phone to tell you where you are spending all your money.
All good systems but what they DO NOT tell you is how much money you SHOULD have in your bank account moving forward. Sounds different doesn't it? Essentially, you want to be able to afford a particular lifestyle (that you love so much) and still meet all of your financial commitments into the future (such as your car, electricity, gas, rent/mortgage and so on).
Budgeting as a task (some would say mundane/boring/not necessary) is particularly difficult as we are living in the age where we are encouraged to get into debt (or for some of us, “even more debt” than we are already in)…
Credit Cards, AfterPay, Buy Now/Pay Later, Interest-Free Credit… the list goes on. All those sparkly things we always dreamed of buying, but could never afford, are now even easier to get in your hands and so you can make them yours sooner rather than later.
Instant gratification in abundance! Hurrah! What the Banks, stores, and finance providers fail to remind you is that these things have to be paid for at some point!
I was brought up in a world where you saved for what you wanted, and then when you had enough money; you bought it.. OR you DIDN’T have it…. End of story! These days we can take it home that day without actually spending a cent…..
And then it starts (or continues!)..… You love the feeling of getting what you want, and forget to plan or schedule in the repayments for the future… The repayments that no-one has warned you about yet, because all they wanted from you was the sale!
Remember the “layby” days? The shop didn’t let you have your lovely new item until you had paid for it, in full….!!! That was the sensible approach… Research now shows we are more likely to pay MORE for something we want, when we can “pay for it later”. We go out for a $100 pair of jeans, and come back with a $200 pair of jeans – and we didn’t spend a cent! Budgeting has gone out of the window!
This is why budgeting doesn't work (anymore).
Thinking back to your fabulous budget, the one in your notebook or on a scrap of paper, this scenario really doesn’t fit in today’s times because none of those systems cater for future repayments for the stuff you “just had to have”…. You know I am right.
Budgeting is a nasty word. Research shows that it conjures up negative emotions and feelings of deprivation… Pretty much like a diet. As soon as we go on a diet, we start craving all the things that we are not supposed to have… Whereas when we eat in moderation and are allowed the fatty yummy stuff, on occasion… it doesn’t seem so bad after all! We can handle it. In fact, you can handle it...
Plus! As I write this, the financial professionals of this great world we live in are warning us of banks tightening up, changes are happening, credit card payments are being looked at. No-one can have any fun anymore, huh? Even for a loan now you need to detail your regular/day to day living expenses and financial commitments…
That tatty piece of paper is really not a good look when you are applying for that loan…
Now, more than ever, we need a Spending Plan. A Spending Plan is like a budget, but it tells you exactly where you are currently spending your money… It also tells you exactly how much you need to have in your bank account for you to be able to afford all those expenses and commitments into the future.
You tell it ALL of your expenses… Right from whether you have one or two “shop-bought” skinny caps or lattes each day, right through to all your regular bills and commitments. Even your fun money and larger items you want to purchase such as the tyres on your car, holidays, a boat and more... Once you have a Spending Plan set up, all you have to do is live it. We all know things change, and there is always stuff popping up out of the blue
Well, a Spending Plan takes care of all that too. It helps you avoid those nasty surprises so you don't fall short on payments… What’s not to love?
Acknowledging that budgeting doesn’t work is the first step to finding your financial freedom. It's time to throw away your notebook, let go of that tatty bit of paper or delete that outdated excel spreadsheet.
Get a Spending Plan. As a Spending Plan looks forward and helps you better manage your money so you do not fall short or live week-to-week. You can see your financial future before you get there!
We Can Help
If you want a Spending Plan that can help you, then please contact us to find out more. We will create a personalised, detailed Spending Plan, just for you!
You won’t regret it! You can book in here for a no-obligation chat.
For more information, check out www.spendingmadeeasy.com.au The testimonials speak for themselves…
