Make every dollar count

The single most important thing you can do to ensure a strong financial future is develop a Spending Plan. Your specific plan will be directed by the goals you develop and the financial resources you have available to reach them. 

While the thought of creating a comprehensive plan may seem overwhelming, it is surprisingly easy and will help ensure that you’re on track to achieve your goals. With an effective Spending Plan in place, you’ll be better positioned to manage all the various aspects of your finances, including your spending, use of credit, saving, and investing.

Plan Construction Development of a personal Spending Plan involves several painless steps. 

Each one is important, and all must be coordinated if the financial plan is to succeed. 

The following are the essential steps of the process: 

1. Evaluating the current situation: “Initial Spending Assessment” 

2. Identifying “wants” and “needs” 

3. Discussing options and adjusting spending accordingly 

4. Tracking spending - Creating a Comprehensive Budget 

5. Establishing and implementing short- and long-term goals 

6. Reviewing and modifying your plan when necessary  

Evaluating the Current Situation Before determining a reasonable course of action, you must have a clear picture of your current situation. 

This is accomplished by conducting an Initial Spending Assessment. 

The goal of this step is to identify where every dollar goes after it leaves your wallet.

A note about net and gross income: 

There are some advisers who recommend that people use their gross income when developing a Spending Plan. 

Gross income represents a person’s income before taxes and other deductions are taken out. 

The problem with using gross income is that it doesn’t offer a true representation of someone’s finances. If a person commits more than 30% of their earnings to satisfy their various deductions, they’re only bringing home 70% of their gross income. 

Under these circumstances, it would be foolish to construct a budget or Spending Plan using gross income amounts.