Where has all my money gone? Is probably the most asked, money related question of all time, at least for me. I often paid quite a heavy price and felt stagnated after each spending episode, and always felt lost and confused right in the middle of a financial cycle, until I took necessary steps to purposeful spending.
So you had great plans, that if properly executed would dramatically change the trajectory of your life, or the year or even the month, you probably had a plan to make an investment, save money, start a new business, buy a new gadget, furniture or even new clothes, but for some inexplicable reason not only do these plans not come to fruition, you cannot really say how or why.
HERE’S HOW AND WHY
you don’t have a budget/ you do not stick to your budget
yea I know you make some very apt mental notes of what to buy when the check comes, but does that count as a budget? NO! Spending without a budget or proper plan is a disaster waiting to happen. Being financial responsible means you must know where and how your money goes and consciously control it. Purposeful spending means mastering your impulses and learning to control them.
You need a detailed, well drafted and well thought out budget
you need a budget like you need money. Money without a plan would be wasted or misused. You need a budget that shows your fixed expenses variable expenses and also make money available for the expected unexpected, budgeting is your greatest asset if you want to master purposeful spending. your budget should show the following
Fixed expenses: These are those expenses that are reoccurring and certain. Those unavoidable periodic expenses you cannot do without, this include mortgages, loan payments, car payments, insurance premiums, school fees, food and the likes.
If you can, you should schedule your bill payments automatically (there are certain software applications for this) to be deducted immediately the money hits the account. It is relaxing to know that these things have been taken care of before you even lay hands on the money.
Variable expenses: These are expenses that are compulsory and reoccurring but may fluctuate or change frequency. This include groceries, gas, dates/dinners, entertainment, clothing and the likes. A well planned budget allows you to have these things catered for and potentially sorted without falling into debt.
The expected unexpected :life happens, and is not under our control, so we must be prepared for certain unexpected but necessary expenses. Money should be kept aside for emergencies, unplanned visits to the ER or hospital, impromptu family visits, or even the good old impulsive spending.
Save unspent money
money that wasn’t spent at the end of any financial cycle, need not be spent then such money should be saved and put to use in the future. No need to dry out the account each financial cycle, nothing wrong with a little excess to fall back to.
Know your needs and wants per time in order of importance and urgency
To master purposeful spending one must know what really counts and want can be done without. It always very important to prioritize your needs and even your wants, so that you do not forgo a more important thing for something that may not be as important or urgent. Importance has to do with its overall value, while the degree of urgency is dependent on time of validity or need. A little ostentatious living doesn’t hurt every now and then, but should be done within your means.
Have clear-cut financial goals and landmarks
This is very important as without goals the future would be a chaotic place, dependent on chance, nobody wants a future dependent on chance. It is necessary to have goals and landmarks you plan to reach.This gives direction and focus and helps you stay connected. Whereas spending without a plan can hurt you in the future.
Plan to splurge or at least spoil yourself every once in while
Yea! You need that, what is the point of making money? To Spend it of course! That’s right. This should not always be a random act, but can be carefully planned, and done in a way that you get maximum guilt free satisfaction, it could be a vacation, a party, a shopping spree, dinners, movies, purchasing some luxury stuff, whatever makes you smile, but just don’t leave it to your moods, you may find that you are always in the mood to have a good time, and that is bad for “the money”
Please feel free to let us know your experiences on this subject and what you think in the comment section.
Also read curbing impulsive spending.