Is Your Money Managing You?
Are you aware that over 75% of Americans live paycheck to paycheck?
Are you aware that over 80% of Americans have debt?
Are you aware that the average American spends over $3,000 at restaurants each year?
Since I had my first job, I have been tracking my spending.
But, only in late 2017 did I begin making a budget.
Now, I rebranded my budget as a spending plan.
Now, I manage my money. My money no longer manages me.
I do this so that I think about it differently subconsciously. I no longer think about how much I can spend and rather think about how much I am spending.
Psychologically, this forces me to evaluate the importance of each place that my money goes more than it had when I called the same thing a budget.
Are you aware that the average American also does not know how much money they need for a month of expenses, are you one of those?
Why?
Is that a good thing?
I don’t think so.
There are three things that I do for my finances, generally speaking. I create a monthly spending plan, I track each transaction (incoming and outgoing, yes, cash too), and I create an annual financial tracker (it’s quite simple) so I can visually see how one month compares to the next.
The spending plan is something I create just before the end of each month and then update after each transaction. The mobile app that I use called Money Lover, allows me to have accounts that I can update manually. I update both of these immediately after a purchase. Usually while in the checkout line or after an online order, I update immediately. Thirdly, the annual tracker is more or less a reflection of the prior month. I focus on the spending categories and also the various streams of income.
The way I think about my finances is much the same as my calendar. I first project how much revenue I expect to generate for the month. Then, I project my giving as a result.
As a Christian, I tithe 10% of everything that I bring in. Then, I read the book, The Blessed Life by Robert Morris and felt called to increase my giving by 1% each year.
This year, I am giving 16% of everything. Now, I’m not saying this to brag or to show off. I am simply sharing this because I am sharing the way that I manage my finances. This is always the first step for me. If I want to give God the first 10% of everything, what does that look like when I quantify it?
That is always my first thing. It will not change. Giving will only grow if I feel led to give above and beyond what I already am. Giving above and beyond my regular giving is something I seek out. God blesses those who bless others and I want to lift others up, empower others, and love others, giving them resources is one way to do that.
Next, I think about my travel schedule. If I am going to be in 3 different cities throughout the month, my grocery spending is going to less than my typical month.
I do the same thing when I consider groceries. I think first, okay, how much did I spend last month? And, I had how many weeks at home? Did anyone come visit that could have inflated that cost?
Next, I think about where I will be this month, how much food will rollover and is still good from the previous month and then, I think a little about the foods I’ll need to buy.
The categories of my expenses are as follows:
Groceries
Restaurants
Home (rent, electric, etc.)
Other giving (beyond the tithe)
Transportation (car expenses included)
Personal (haircuts, appointments, etc.)
Shopping (anything for myself that is unnecessary)
Travel
Debt
Church (tithe)
Tuition
Other school costs
Gifts (for friends, family, and anyone else I gift with something)
Entertainment
Books
Business Ventures (anything I do in business for myself)
Business (anything that I am spending money on for someone else)
Now, those are the categories that I use, I think that it covers most things. I will eventually add a category for potential children.
I think about how I want to live and again, what’s most important to me. Then, I build my spending plan off of that, off of those priorities.
What God trusts me with financially, I look to honor Him with.
I read the book God and Money by John Cortines last October. There was a point in there that impact my spending habits also.
The book taught that wealth is not deserved, it is rather something we are trusted with.
Try the 20% test. If you increased spending by 20% what would you add to your lifestyle? If you decreased spending by 20% what would you eliminate from your lifestyle? In either of these cases, are what you are adding or subtracting important in living out your God-given calling?
This is the way that I strive to always view my finances now.
I ask myself:
Is where I am spending my money a priority? If yes, to who?
Is where I am spending my money a necessity? If yes, for what?
Is where I am spending my money important in living out my calling? If yes, how and why?
I look at the reverse of those questions also:
Is where I am spending my money a priority? If no, why spend money there?
Is where I am spending my money a necessity? If no, what is its purpose?
Is where I am spending my money important in living out my calling? If no, why do it? Could the money spent there be better used?
There is no one way to spend money or manage our finances. This is what works for me.
Just remember, we are ultimately in control. If show God that we can be trusted with little, He will trust us with much. That is how I live.
“Money isn’t your problem. A lack of production, commitment and constant improvement is your problem” — Joe Duncan