OnPlane Financial Advisors
Do Well. Be Well. Financially.

Blog | Flat Fee Financial Advisor | Washington DC

I like to write about what happens in our lives and how it can relate to our financial lives. Not always but most of the time. So keep checking in. I'm glad to have you reading along.

Give that Budget the Bird!

Budget. It's a dirty, dirty word. Go ahead and say it out loud. See how many people around you avoid eye contact with you or give you nasty looks. I'm telling you! It's right up there with the dirtiest of the dirty words. It conjures up feelings of anxiety, fear, and even downright disgust in many people. Why? I'll tell you why.

Budgets can feel constricting, suffocating, and demanding. They ask of you to stay within the confines of the box. They come with defined borders.

You must color within the lines!!!!

And we don't like them! For many reasons.

Mostly because they're all the things I described above. And also because most of us don't want to be told how and where to spend our money. We aren't going to retire just because we stopped buying the fancy latte every day. And when you see those budgeting articles, I'll save you the time. It probably ain't happening. Maybe for a shorter period of time. But unless you’re uber-discipline, move on to the FB quiz that tells you what celebrity you're going to marry. You're welcome.

Look, we like to spend our money. Intrinsically, it makes us feel good. We spend it on things we like, things we need, things we don't need. Our family, friends. And on and on. We do it. And we give our budget the middle finger while we're doing it.

Because it. Feels. Good.

But guess what? While we're giving our budget the bird, our retirement is giving us the bird right behind us.

And that's why financial planners tell us we should have…no, we have to have…wait, no….we NEED a budget.

Bleck.

News flash, I'm a financial planner. And guess what? I hate the word budget. Okay, Jill and I do tell our kids not to use the word "hate." Fine.

I dislike the word because I've learned most people don’t like them. Heck, I don't even like them. I do think most people (want to) create a budget. I think a lot of us do it because we read an article or were told we needed one. Here's what I think:

Don't budget.

[gasps] 

Yeah. I said that!

Don't budget. Give that budget the bird. And then turn around and give your retirement the bird too, because we got something for that, too!

It's called a "spending plan." Say it with me…Spending. Plan.

See? That wasn’t so bad, was it? And a spending plan is a far cooler way to b*dg*t.

NOTE: I'm not using that dirty word anymore. And neither are you.

So how do set up the spending plan? Up to you. We can make it as simple or as complicated as you like. Today, I'm going to show you the simplest spending plan ever. Ready? Take a look at the graphic below.

your 6 step spending plan.png

Your SIX-STEP SIMPLE SPENDING PLAN!

That was simple, huh? Simple not easy, though. Spending plans still require a level of discipline. And we have to re-wire how we see our money and where it goes in. A sequential order. This is the “not easy” part I mentioned above.

Most people will spend their money like this:

1) taxes first (direct out of paycheck)

2) mortgage or rent

3) lifestyle

4) debt

Then we save a little bit of what’s left over and then with the rest we protect our balance sheet. This likely varies based on your personal goals or situation (I wrote about that) but I think you get the drift.

But maybe we have some debt we want to pay off. Okay, no sweat. We make a quick adjustment to our spending plan to account for our plan to pay off the debt. Slip [insert debt of choice here] into Step 5b. Adjust your percentages depending on the amount of debt and how quickly you want it paid off. Again, simple…but not easy.

What I like most about this is it's just a reframing of where our money goes and why. No more overthinking and overanalyzing. Six steps. Maybe seven if we want to pay off some debt. As long as our protection and savings is adequate, we'll be on a solid track.

Is this a super simplified Spending Plan? You bet it is. Could we add a little more detail? You bet we can! Either way, I think most of us can benefit from the freedom it provides. No more spreadsheets and pivot tables. No more b*dg*t categories.

No more feeling trapped in the box.

You'll notice in Step 5 I listed "Everything Else." That's really what it means. Once you pay taxes, mortgage/rent, protect, and save, you're good. You can literally do anything you want with "everything else."

Buy everything in the Sharper Image catalog. Get a new car every year (not a recommendation, btw). You could even buy THIRTY lattes a day. And give that b*dg*t the bird while you post about your new celebrity spouse on InstaChatFaceSnap.

Need help figuring out or setting up your spending plan? I can help with that.