When managing your money, it can be depressing to use the word “budget.” Indeed, I, personally, don’t enjoy budgeting. Rather than feeling limited by a budget, I prefer to use a “spending plan” that helps me feel more as though I’m directing more resources, rather than limiting my spending. Of course, it’s mostly a matter of preference. But you might be surprised at what a spending plan can do for you:
To me, a spending plan is more about deciding what your want your financial resources to accomplish. I start by prioritizing my financial goals, and recognizing what obligations need to be paid first. My mortgage, car payment, and groceries are are all things that need to be taken care of fairly early on in the month.
However, I also have goals to meet in terms of retirement, charitable giving and building my emergency fund. These are things that I can put on automatic, with a certain amount of money going to these goals every month. Once all of my most important expenses are taken care of, and my goals are funded, I can pretty much do what I want with what’s left over. I don’t worry about spending a certain amount on “entertainment” each month; it fluctuates, depending on what we’re doing. As long as my wider spending goals are taken care of, the rest doesn’t matter to me as much.
To me, a budget is rather limiting. It feels like I only have a certain amount in each category, and I’m trying not to reach the max out point. A budget encourages spending to a certain point in each of your categories. If you have a spending plan, though, you are more like a director, making sure you can accomplish certain things, and then doing what you can with the rest.
In my mind, a budget is reactionary. You have to react to how much money you have set aside in certain categories. However, with a spending plan, you are more proactive. You create specific goals for your money, and then make sure they are funded. Then, you don’t have limits on what’s left over. You can spend it on whatever you want, without rigidly sticking to certain categories.
What if You Don’t Have Enough Money?
If course, some of us don’t have the money we want to spend, whether we use a budget or a spending plan. In such cases, it means that you need to look for ways to earn more money. You can increase your income through a number of opportunities. It is important to be proactive when it comes to your money.
This is why I like the spending plan mindset. With this mindset, you identify what you would like to have happen, and then go out and look for the income to reach your goals, whether that means getting a second job, starting a side hustle, or donating blood plasma twice a week.
In a budget mindset, you see that you don’t have enough money, and then you have to cut back somewhere to make your finances fit your budget. Instead of spending less, look for ways to earn more, and use a spending plan mindset to get you there.