Why you Need a spending plan
A typical budget captures known expenses and maybe loosely considers future expenses. In the Bottom Line framework, we work to consider all expenses – known and unknown, fixed and variable. We set boundaries around wants. We remove the possibility of debt. In this way, we get a realistic view of what is available to spend and make choices so that our spending doesn’t conflict with our values and our goals. This can be challenging. Confronting these numbers can bring up big feelings. We might feel sad or hopeless, deny the numbers, or justify their existence. But making a spending plan in this way has incredible benefits, and I want to give you a few reasons why you should push through in creating and following a spending plan, even if it feels overwhelming in the beginning.
1. Knowing plainly what life costs allows you to make decisions clearly.
Being a responsible citizen is expensive. Paying for the objective needs, such as rent or a mortgage, utilities, insurance, taxes, children, and pets can be in the thousands of dollars. When we know these costs, and know what we need to include in our life to feel safe, then we have a more realistic idea for spending money on the other things in our lives.
2. Having clear categories for all your spending allows you to understand the tradeoffs.
A spending plan, whether it’s the Bottom Line framework or any other, should incorporate all of the categories in which you spend money on each month. When you have a spending plan to consult and it captures everything you spend money on, it allows you to make choices and understand the tradeoffs of spending money on one thing versus something else. This conscious guide provides a basis to reflect on whether you are spending money on things you value and that are helping you reach your goals.
3. A clear spending plan supports your boundaries.
When you have a clear spending plan that aligns with your values and your goals, and you feel pressure to deviate from your plan, you have a better foundation to say “no.” Having a plan, even if it’s only for you to see and use, empowers you to stick to what you care about because you understand the consequences of violating your own boundaries.
4. A clear spending plan, created with a partner and made to achieve your collective goals and values, provides a backdrop for making objective decisions together.
When you have a spending plan with a partner or spouse that you both make together and adhere to together, you can consult the plan when there is any disagreement about spending. The plan provides a foundation for discussion and serves as a neutral starting point.
5. A spending plan can lighten the mental load.
A spending plan can, and should, incorporate everything you spend money and resources on. When your spending plan does that work for you, you can release the consuming thoughts and stress taking up brain space and allow it to be external from you. It is a resource that contains the information you need and that you consult as you make decisions in real time.
I know that for many of us, money brings up feelings of avoidance. It’s often easier to bury our head in the sand and say a Hail Mary (this is what I used to do!). However, having a clear spending plan, with realistic numbers and appropriate boundaries, redirects our energy towards things that provide us greater joy and allow us to focus on the things we really care about.