Weekly Column: New School Year, New Spending Plan

(Obviously, there's been a delay between my writing this for the local paper and my actually posting it here!)

New school year, new spending plan

Do you know exactly how much income your family has available every month? Do you know, within a few dollars, how much of that will be spent? Many people will answer “all of it” but might not know where all the money goes. If you are one of those people, creating a spending plan will help you track those dollars and also let you hang onto them for a lot longer.

Budgeting fatigue

Just like the word diet, talking about budgeting gives people a negative outlook as though they will be forced to sacrifice all the things they enjoy. Saving receipts and doing math might feel like one more nasty job at the end of a long day. But it is worth it to find out where your money goes every month. Use your bank statements and credit card bills and track all the cash spent by family members for a couple weeks (a month is better). Try one of the great budgeting resources found online: https://moneymentors.ca/home-budget/ (this one puts all your expenses in a pie chart) or www.gailvazoxlade.com/resources/interactive_budget_worksheet.html . Find a template that works for you and get started.

Budget vs spending plan

Once you know how much money comes into and leaves your household in a month, and you can see on paper whether you are coming up short, it is time to make a plan. The Money Mentors website defines a budget as “a spending plan that helps you get as much as you can from each dollar”. Seeing your expenses listed on paper can point out waste and unnecessary spending that might otherwise go unnoticed. Use a budget as a tool to cut excess costs, saving money for the things you want. It might not happen in the short-term but with hard work and persistence you will get there.

Write a list of some things you would like to purchase: a new vehicle, a house, a family vacation. Perhaps you would just like to build a small and large emergency fund for your family’s peace of mind. Put a dollar figure on each of your goals, then turn to your interactive budget worksheet and look hard for places to trim your spending. Remember, you will need to tackle outstanding debts, particularly credit card debt, before you get to the fun part of saving for your goals. But if you can free up even a few extra dollars a month, it will help get you where you want to go.

Easier said than done

If you’ve been underemployed for some time it must get frustrating to be told to budget better and everything will be alright. But making a plan and sticking to it gives a sense of control in uncertain times, which helps morale and prevents getting into a deeper hole than necessary. There are so many reasons to start tracking your money, one of which is only four months away: Christmas (no one wanted to hear that, sorry!). If you are out of money at the end of the month now, December will be no different…aside from the additional spending, that is. But if you can set aside some money every week starting now, hopefully you will avoid going further into debt with Christmas expenses.

And then there’s hot lunches

If you have school aged children then you’re familiar with unexpected and urgent last minute requests for money for sports, crafts, the list goes on. Have you made room in your plan for these unforeseen costs? Avoid derailment--factor a small amount of cash for school expenses into your budget even if it means going without your drive thru coffee every day. Focus on your long-term goal—a vacation, a massage, being debt-free—no matter how big or small your goal may be you’ll only get there one small step at a time. If certain costs are inevitable you must factor them into your list of expenses or you won’t see the results you are hoping for.

No matter what you call it, a spending plan or a budget, this is the way that people get themselves out of debt. Do you know a family that seems to weather every storm with relatively little change to their simple lifestyle? Do they still manage to have a vacation and pay their bills although their income has taken a hit? Are they independently wealthy or, more likely, do they plan how their money gets spent every month? Do they foresee upcoming and unexpected costs and save for them in advance? If you think that family would be comfortable discussing how they handle their money, approach them for tips and advice. Treat the new school year like a new beginning and start planning for the costs that are just around the corner.