How Do I Stay On Track? A Spending Plan


Having a financial plan is the path to true freedom in your finances.

I love the saying, “If you don't know where you're going, you'll hit it every time!”  Financially speaking, many people your age go through life without thinking about where they are headed. You live in a generation that is gratified by instant feedback and that values recreation and experiences. Since money is often the means to those ends, it is easy to end up spending haphazardly without a plan.

Having a plan is a true path to freedom in your finances. Having raised five kids, I had experience teaching a variety of personalities about financial decision-making. No matter what kind of personality you have, I can confidently recommend the use of the “envelope system” as a tool to help you understand the freedom that can come through having a plan.  

For the next three months, I challenge you to try using an all-cash envelope system and see what happens.

Step One:  For one month, write down everything you spend. (Using a computerized program is helpful, but I’m a believer in the power of pen and paper to drive a point home in this process.)  At the end of the month, categorize your spending and add up the amounts in each category.

Step Two:  Set a goal for how much you’d like to be spending in the certain categories that you came up with.  (Typically, the goal will involve reducing your spending and moving money toward savings-related categories for future use.)

Step Three:  For two months, get cash and divide it into your “envelopes” or your spending categories.  Make your spending decisions based on how much money you have in the envelopes, without relying on other means (like a credit card).

Step Four: After the three months, spend some time evaluating your spending habits, your savings goals, and your cash management system to decide the best way for you to continue to exercise financial wisdom. I believe online tools are very helpful in maintaining a working spending plan.

Step Five: Enjoy the financial freedom that financial wisdom affords! Just as God gives us guidelines in Scripture to protect us and to provide emotional and spiritual freedom for us, having financial guidelines will protect you and provide long-term financial freedom as well! 

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