Personally, I have never been able to stick to a budget. I don’t like the idea of it, and I want to spend my money freely, choosing as I please. If so, why would I write about budgeting? Because not managing my money hasn’t worked for me. I don’t budget. It’s a bad word; I have a psychological block to it; most of us do, but I found a better way.
There are two types of people in the world: those who know where their money goes and those who don’t. Those who know where their money goes are typically on the road to financial success.
I came across an idea about budgeting that made all the sense in the world to me, and all the difference in my handling of money. Simply stop budgeting and create a spending plan. It is not a subtle difference, and is certainly not a play on words. Creating a spending plan versus creating a budget is the critical difference in deliberately creating the life you decide to live.
Budgeting has a negative connotation to it. In practice it is restricting, telling you what you can’t afford to spend. Psychologically it places limits on you, just like your parents, your boss, your spouse, the government, or anyone who’s in a position to control what you do. Naturally, we rebel against budgeting like we do anything or anyone who tries to control us. Budgeting is often reactive, like when you look at your budget only at the end of the month instead of watching it as you go along. By the end of the month, it’s too late to do anything about the budget until the next month, at which time the same thing usually happens again.
A spending plan, on the other hand, is based on choices you make. These choices emerge from a deliberate vision you have of your life. You are not just trying to get out of debt, you are not just trying to buy a house, you are not just trying to go on a nice vacation; you are choosing to live a life of your design, deliberately.
To create a spending plan, the first thing you need is a vision of what you want life to be, then you make financial decisions and spending choices to support your choices. Understand that you can afford whatever you truly set your heart and mind on affording. If what you set your mind on is a BMW, you will get it. If you want a house in the suburbs, you will find a way to afford it. If you want private school for your kids, you can make it happen. A spending plan, then, is simply the deliberate allocation of your financial resources. You can decide to allocate your financial resources to bills, entertainment, savings, wealth creation, school, debt elimination, and homeownership.
When your allocation of financial resources becomes deliberate, you will find yourself on a path of financial independence where money is not central to your enjoyment of life but just a well-managed tool to help you get what you want in life.
As you begin a new year and your journey to homeownership, create a vision for your life, then decide on the role money will play in that vision. Create a spending plan that includes the reallocation of your finances to support your choices. This sort of plan invariably means eliminating expenses that are inconsistent with your vision and then focusing on debt elimination, savings, tithing, investments, and homeownership. Remember, buying a house is not just about real estate; it is also about getting your financial house in order.