Why now is the time to create a spending plan

Over the last week I have had several interesting conversations with both clients and people in general.

Everything from “Why is my bank asking so many questions?” to “What’s the best way to budget?”

As we move back to a sense of normality there is a universal understanding that life isn’t like it used to be before New Zealand went into lockdown.

Jobs have lost for many, others have been altered in either lesser hours or changed environments, and for some, while their employment seems secure at the moment, there is a nervousness of whether it will stay like this.

During my career in mortgages and lending one thing I found constant was those who had a spending plan (budget) and a process that allowed them to monitor their spending according to their plan had the least stress in times of uncertainty.

So, what are the components of a successful spending plan?

  1. A spending plan focuses on what is ahead, not what you have spent previously. This will typically include all expenses you anticipate in the next 90 days.

Focusing on previous expenses means you set your future based on your past and it is unlikely you will be intentional about where you can make adjustments to get ahead

  1. A spending plan will have a strategy in place to regularly monitor your actual expenses to see how they compare with your plan. Adjusting your habits to fit your plan keeps you on track and helps you gain an awareness of positive changes you can make.

Monitoring your expenses weekly is best. You can quickly correct any over-spending by choosing to spend less in a particular area the following week)

  1. A spending plan has a review process. A time when you revisit what has happened with what you intended. A good review process will cause you to change where you are spending your money based on your value system and what is most important to you.

Your review process should allow for a resetting. Best done monthly means you can reset based on the next 3 months and adjust any savings or other goals as they are accomplished or need to be added into your plan.

A (budget) spending plan is vitally important to have in place right now and then learning to use it to your advantage financially and here’s, why.

  • 4 million Kiwis don’t have an emergency fund
  • 15% would use up their savings in less than a week
  • Almost 1/3 of Kiwi workers are unprepared to cope with a sudden job loss
  • 39% of New Zealanders, don’t have emergency savings to fall back on.
  • Only 7% can rely on their current savings for three months.

Don’t become one of these statistics. Put a spending plan in place today that will allow you to Plan, Monitor and Review what is happening with your finances.

If you aren’t sure where to start check out my ‘Online Planner’ Demo.