Spending Plans for Success
Is there Money, Success, and Happiness in Your Future?
Create Your Future
Maybe you haven’t thought about your future much. Maybe you’re worried about it. Maybe you think someone else is responsible for it. Maybe you have some hopes or dreams, but you’re not sure how to make them happen. Maybe you’re just trying to focus on today.
Nobody can control the future, but there are some positive things you do TODAY to create a better future for yourself. One of the most important things you can do is learn how to manage your money (and your time), so you invest your energy well and can reap the rewards.
The Secret to Success
The basic tool for managing money is to HAVE A PLAN. This plan is a SPENDING PLAN, also called a budget. A spending plan puts you in control of your money and your life. It reduces stress, helps you reduce (and eventually eliminate) debt, and gives you an increased sense of security, freedom, and success.
Write it Down
A spending plan or budget is simply this: a written-down estimate of income and expenses for a set period of time. You use the budget to understand and take control of your earning, spending, borrowing, and saving, so that you stay on track with your financial goals.
Build in a Cash-Flow Cushion
Make sure you include savings into your spending plan. You should think of savings as a regular bill, rather than something you do if you have money left over. Savings is more than just "saving up" for a purchase or a long-term goal like retirement. It's your cash-flow cushion that you can draw on (and then pay yourself back), so you are never late on bills and are covered in case of an emergency. it gives you security, control, and peace of mind.
Keep Money in Savings
College students should have at least $800 in savings at all times in case financial aid is delayed or they have an emergency that would impact success in school, such as a car breaking down. Working adults should ideally have 3-6 month's living expenses saved up. Figure out your savings goals and save a reasonable amount each month, just like a bill.
Types of Budgets – What Type are You?
Some types of budgets include: paper budget, spreadsheet budget, and online budget. The type of budget you prefer will depend on your personality, your habits, the level of detail or control you want, and where you are in your life as far as your income and expenses. You might need to try various kinds before you find a system that works for you. Here are some things you can try:
- Montana University System Online Budget ToolsFind a Spending Plan that Fits Your Style
People are different when it comes to the money management system that works for them. Some people want a a lot of detail, and break down larger categories (Entertainment) into specific line items (Movies, Coffee Shop, Music), so they can track exactly where their money is going. Other people prefer to have the broader categories so they can keep it simple.
You Can Do It!
Even small children can learn to manage money. A very simple budgeting method, good for cash, is to create envelopes for different categories of money. For kids, the categories might be very simple: Spending, Sharing, Saving, and Investing. For a college student or working adult, the categories may be more elaborate, but the basic concept is still the same – to keep track of your money, so you can be in control of how you spend it. The trick is to find a method that works for you – and then use it!