The Most Impactful Financial Habit To Practice

Listen up soldiers! We’re going to do some basic training to ensure your Jericho Conquest is successful. On your journey to become a good steward of money, it’s very easy to lose focus and get distracted. Our emotions can lead us to buy things that we want but don’t necessarily need. We must find a way to stay on track. That’s where the concept of budgeting comes into play. John Maxwell states that a budget is “telling your money where to go instead of wondering where it went.” Now some of you just cringed at the term budget because you’re envisioning complicated spreadsheets floating in midair. For all intents and purposes, the budget is a “spending plan.” Soldiers, let’s begin our basic training learning how to create a spending plan.

Selecting A Budgeting Tool

You can create your spending plan using budgeting software, an Excel spreadsheet, or plain
pencil and paper. The number one criterion you should use to evaluate budgeting tools is ease
of use. My wife and I personally use a budgeting software tool called EveryDollar. I highly
recommend it. Some other good budgeting tools available are YNAB (You Need A Budget), Mint,
Mvelopes, and Personal Capital. At the end of the day, use what works best for you.

Account For Your Income

The first step in creating a spending plan is to write down the income you expect to make this month. Think of your monthly income as your boundary. This establishes how much money you have to work with to pay your expenses. Income includes any salary, bonus, side gig money, etc.

Account For Your Expenses

The next step is to write down all your monthly expenses. Literally, map out your spending categories such a rent/mortgage, food, utilities, etc. Write the corresponding monthly cost next to each category. If you’ve never done this before, I recommend going through your bank statements from the last two months to determine the proper totals. Really take time out to think through what “all” of your expenses for the month are going to be.

Give Every Dollar An Assignment

Once you’ve done step 1 and 2, pause to review. Every single dollar of income you have should be assigned to an expense. If you find you have extra unallocated income, create a category called “buffer” to add the leftover money. Continue this practice of “buffer” money monthly to ensure you’ve got some wiggle room going into the next month. If you see that your expenses exceed your income, you’ve got some homework to do. Don’t put your head in the sand like an ostrich. Be brutally honest with yourself and go through a wants/needs analysis to begin cutting expenses. The important thing to note here is that assigning your expenses an amount is “intentional.” There shouldn’t be anything random that comes up in the month outside of an emergency.

Honor Each Month

Create a specific spending plan for each month. The type and amount of expenses change
based on the season. Holidays, birthdays, and other celebrations are scattered all throughout
the year. Also, some expenses may get paid monthly, quarterly, semi-annually, or annually.

Repeat This Practice Continuously

Congrats! You’ve successfully created a spending plan. But we’re not done yet. You’re going to
repeat this habit every month, forever! A spending plan will help you achieve your life
goals of effectively giving, saving, and spending money. If you have debt to pay off, your
spending plan will help your assault on debt. You can determine how much you need
to pay each month and how long it will take you to get out of debt.

Allow Gracious Insight

The process of creating a spending plan is simple, but it can also involve some initial
discomfort. If you have never created one before, you may experience the pains of behavior modification. Correcting the habit of overspending is like learning a new skill. Shaking out the kinks can take about 90 days. I implore you to give yourself grace. Whatever you do, don’t quit.

Soldiers, the use of a spending plan is paramount to being a good steward of money. If you fail to plan, you plan to fail. What obstacles in your life are preventing you from using a spending plan? How do you think a spending plan can help you meet your financial goals? Oorah!


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