Allocated Spending

You hear it all the time. You need to write a budget, You need to write a budget.

When we coach people a lot of times they will say something to the effect "We do have a budget. I put everything into Quicken / MS Money so at the end of the month I know exactly what we spent." Our goal as Financial Coaches is to take that thinking to the next level. You need to tell your money where its going before you get it, not after its gone.

Now let's take and dial that down even further. After you write your budget and you have spent every penny (not one more and not one less) on paper and certainly. You have your four walls taken care of (Food / Clothing / Reasonable Transportation / and Shelter), and if you have debt you have your debt snowball working. You know how much you need to save for vacation / gifts / car repair / furniture replacement etc. You need to list how all your income is coming in and on what days. If you get paid every two weeks, list those days. If you get paid every week and your spouse gets paid on the 1st and the 15th than you need to list it on those days.

Now here is the important part. You need to match your credited amounts with your paychecks. Lets say that you and your spouse get paid every other week but they are different weeks. So in Feb 2011 you will receive paychecks on 2/4, 2/11, 2/18, 2/25.

Here are some examples to think about.

• Need an oil change sooner than later? That comes out of the first paycheck.
• Water Bill due on the 22nd and you get paid on the 18th. Take it out of that paycheck.
• Rent or Mortgage due on March 1st That comes out of the Paycheck on the 25th
• Electric bill due on the 14th than it comes out of the check on the 11th.

Now your specific situation will dictate your amounts but this should give you the idea.

When you master this aspect of budgeting is when the light bulb goes off in your head and you start to get it you become the Master of your money. After that you will become unstoppable.

March is right around the corner so I challenge you to give it a try. The first one will not be perfect but take notes and adjust it after about three months you will be pretty close.

Source by Daniel R Stevens

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