![]() In episode 90 of my podcast, I discuss how to stick to your spending plan and navigate money guilt: If you’re scraping the peanut butter jar so badly that you’re starting to get plastic shavings on your sandwich, it might be time to clear up some fixed expenses first. Now, just to be clear, just because we have this as a category doesn’t mean you have to allocate money to it. These are expenses like subscription services, endless cups of Starbucks, expensive shoes, dining out, etc. Other items in this category include internet costs, education, healthcare, debt repayments, insurance, and other expenses that pop up every month without fail. They’re housing, utilities, food, and transport. There are four major components that you simply can’t eliminate completely. What does it help to save $100 on rent every month only to spend $100 extra on traveling? You may find moving to a cheaper apartment or selling a car might allow you to breathe a little easier month-to-month, but the cutting needs to make sense to you. If you’re living paycheck to paycheck, this is also the area you want to comb through to make sure you’re not paying for things you don’t actually need or want. You also need to allocate funds to this category first. To make sure the money goes where it needs to, you need to complete your fixed costs category first. Investments and savings are easy to tally up, but you need to go through your fixed costs and guilt-free spending categories to see whether you’re overspending. When you can pinpoint what belongs where, you’ll quickly start to understand where the gaps in your financial plan are.įor instance, if you’re spending $500 per month on guilt-free items and nothing on savings or investments, is it really guilt-free spending? Or, if you have a fixed costs bill of $5,000, but your net income is $5,000, you might have a lifestyle you can’t afford. Now, you’re going to see me talk about these four categories a lot because all your expenses are contained in these categories. It’s time to sit down and categorize your spending into four buckets. ![]() When there is simply too much a month for your paycheck, there’s a good chance you’re not aware of what your lifestyle actually costs. You know your money matters are out of whack when it feels like you’re starring in Macklemore’s Thrift Shop music video. This is going to be the foundation of your Conscious Spending Plan. ![]() I’m going to help you redirect it to the places you choose, like investing, saving, and even spending more on the things you love (but less on the things you don’t). ![]() Instead, we’re going to create a new, simple way of spending. Who wants to track their spending? The few people who actually try it find that their budgets completely fail after two days because tracking every penny is overwhelming. The main issue with it is simple: Human willpower. This is unconscious spending (aka spreadsheet budgeting). How often do you feel guilty about buying something but do it anyway? How many times have you opened your bills, winced, then shrugged and said, I guess I spent that much? That might have worked for them, but it doesn’t work now. When people think budgeting, images of their parents studiously going over receipts, writing down expenses in a notebook, and screaming, “WHY DID WE SPEND SO MUCH ON GAS LAST WEEK?” come to mind. ![]()
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