Hey there, welcome back!
I’m so glad that you continue to come back day after day and learn more about budgeting.
You know, budgeting seems like it should be so simple. But when life gets complicated, life gets busy, and finances get stressful, all of the sudden, this simple task is not so simple anymore. So over the past few days and for a couple of more, we have been talking about how to create a budget that’s actually going to stick. I hope that you have found these exercises eye opening and helpful so far. And think of them as building blocks towards your budget, your financial plan, and ultimately, your financial success. Those goals that you’ve set for yourself, or that you haven’t set for yourself quite yet, can absolutely change your life and change our world. So I just want to continue to encourage you and thank you for joining me. But I want to encourage you that you can do this. That your goals are important and that if you keep practicing and using these fundamentals, that they will happen. And I want you to come back and tell me all about them. Nothing else lights my day up more than hearing somebody has used my budgeting system or one of my templates in order to achieve one of their goals. Will you do that?
Okay. Now, let’s get back on track here. Now that we understand the concept of future you… we are going to come back to current you. We’re going to make sure that current you know exactly how much you can afford to spend on a monthly basis without blowing the budget. Now if you have budgeted in the past most of you have used templates or models that have had you allocated money for kids clothing, your clothing, entertainment, miscellaneous, what else… wine… alcohol… all of these things. I don’t like doing that. I don’t got time for that. I don’t know if you have more time than I do, but I did not have time to guess how much I was going to spend on all of those different categories only to know that I was going to be wrong and I would have to rob Peter to pay Paul, so to speak, and reconcile them at the end of the month. I don’t have time for that in my life. If you do, congratulations, I want you to go and use it to spend time with your kids, or get in some more exercise. It’s not meant for budgeting.
Your time is not meant for budgeting.
Lindsay Plumb, Founder of the Pretty Money Club
Here’s how I do things: I call the amount of money that you can spend, or your spouse, or your kids, (depending on who is involved in this budget) your spending money on a monthly basis is called Lifestyle Spending, or a Lifestyle Amount or a Lifestyle Number. The concept is all around your lifestyle. This money is going to be spent on all the stuff that hasn’t been planned. Going out for lunch, stopping for coffee, buying a pair of shoes on sale, or maybe you don’t spend it and you’re going to save it up for that pair of shoes that you hope are going to go on sale next month because you want to have the cash for it. So lifestyle money is the amount of money that you can afford to spend this month without breaking the budget, without stealing from future you and without jeopardizing your goals.
A lifestyle budget is the amount of money that you can spend on all the things you WANT to without breaking the budget or robbing money from Future You.
Lindsay Plumb, Founder of the Pretty Money Club
Sounds great, right? Imagine if you could spend totally freely, knowing that all the things that were important and necessary in your life and all the things that lit you up and you want to achieve are going to happen while you were spending this money. Imagine what will happen when your spouse has the same thing. They have a lifestyle budget amount also. And they can go out and spend freely with no nitpicking, no judgement, no questioning on why they spent that on this, or this on that that everybody involved in this budget can spend freely knowing exactly what amount they have to spend. Does that sound good?
If your spouse has a lifestyle budget, you don’t have to nit-pick or judge what they spend their money on. Imagine saving that argument!
Lindsay Plumb, Founder of the Pretty Money Club
Okay, so here’s where we are finally going to get our numbers into the budget.
- We’re going to take all of our needs and put them into the budget template.
- We’re going to take all of our future you categories and numbers and put them into the budget.
- We are going to take all of your sources of income and put them into the budget.
And when I say income, I mean all of the sources of income involved in this budget. So if this is just you, it’s your income. If this is a household budget, which I find works a lot better when you’re working with a spouse, then all of the income. I don’t mean gross income. That’s your salary, that’s how much you’ve earned. Net income is how much landed in your bank account this month. This is the number that I want you to include in the budget template.
Now, you are going to notice that some quick math happens. And we take one number away from the next, and we come up with your lifestyle budget. This is the money that you get to spend on whatever you want.
If your lifestyle budget has four figures, or more… I want you to go back and look at your future you categories. Look at areas that you can beef up in your future you categories. If your lifestyle number is only two digits… I want you to look for areas where you can decrease your expenses or shift your goals maybe to be a little bit longer than you would hope for. It’s very important that you have at least a few hundred dollars available for spending.
You need at least a few hundred dollars in your Lifestyle Budget. Anything lower is unsustainable.
Lindsay Plumb, Founder of the Pretty Money Club
Why is that? Well, because life is expensive! There’s a lot of stuff to buy and pay for. You could convince yourself that your family will live on ramen noodles, but it’s not going to be sustainable. This budget needs to have money to spend, okay? And so if your lifestyle number is too small, we either need to work on decreasing the expenses, or increasing the income, or shifting the goals. Those are the three options that we have. There is a fourth option, which is throwing the whole thing away, putting our heads in the sand, staying on the hamster wheel and wondering where all our money is going and why we have this stress and anxiety and this burden hanging over our head. That’s another option that I absolutely do NOT suggest that you choose. So go and get your needs and your wants into the monthly expenses area… all of your future you numbers into the future you categories… all of your net income… and come back and look at that lifestyle number. If it’s too big, we want to bulk up the future you categories. If it’s too small, we want to decrease expenses, increase income, and/or shift timelines on our goals. It’s important that this concept works well for you, because you won’t use this budget and not achieve your goals and the last four days will be a complete waste of your time. So ask your questions. Let me HELP you get this budget in place in a way that’s going to work for you this year to help you achieve your goals.
Alright, go find out your lifestyle number. See you soon!
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