SPENDING PLANS

A well-thought-out spending plan will make your life abundant, but if you fail to stick to it, your life will become one of scarcity, and you will think you never have enough.

In my experience, many people overestimate their income and underestimate their expenditure. That’s not surprising. It’s another form of the negativity bias I wrote about last week. It stems from an instinctive fear of loss and failure.

However, living without spending plans is also self-deception with two dangerous consequences:

1. You mismanage your money
2. You mismanage your expectations

Spending plans deliver certainty.

Detailed spending plans help you to understand where you are now and what the future looks like.

When you know these things, you begin to sleep at night. I’ve made the point before and will do so again: even if it’s terrible, you know where you stand and can do something about it. That is empowering, not terrifying.

Not knowing is more stressful than the poor numbers themselves. That’s why it is essential to develop your spending plans (a phrase I prefer to “budget”, which comes across as negative, unlike “spending plans”, which imply growth and positive action).

Spending plans are the mirror of your life.

No one likes spending time on their spending plans. That’s because it is a time-consuming exercise, especially when you first start.

However, your spending plans also reflect the way you live your life, and your reluctance to do the work is because it can bring home the truth of your lifestyle: that you are surviving, not thriving. Your spending plans might tell you to your face that you are living a life of scarcity. You never have enough for what you want.

And here is the great advantage of planning your expenditure for the next month, quarter, year or lifetime: You can link your spending plans to your life plan.

If your life plan requires greater expenditure, you can work out how to increase your income to cover the expected costs.

Should you plan for a life of abundance or scarcity?

However, I wonder if you would not be better off reducing your expenditure rather than increasing your income until your finances are in balance.

It’s a thought that flies in the face of current orthodoxy, which is to maximise income to feed lifestyle expenditures.

Either way, you need to set spending plans and stick to them. Doing so will help you live a life of certainty and abundance, not doubt and scarcity.

Your Next Steps

Reflection time

• Do you worry that you don’t know your current financial situation?
• Do you see financial plans as empowering or frightening?
• Is your life one of scarcity or abundance?
• Are you enough and do you have enough?

Taking it further

Attributions and references

Photo attribution

Photo by Bennie Bates on Unsplash

Audio link

https://audio.com/jeremy_deedes/audio/spending-plans/

Other attributions and references

Deedes, Jeremy et al. Enough: Unlock a Life of Abundance Starting Right Where You Are. Melbourne, The Right Company Press, 28 Oct. 2021.

Related posts

Do you know your net worth? And does it matter?

Enough is Enough

Scarcity, wealth and fear

ABOUT

I work with ambitious, family-oriented professionals transitioning to independent consultants to create a 3 to 5-year holistic plan so that they grow wealthy, make a difference and find meaning.

My clients are aged 35-50. They are in a long-term relationship with family and parents who are supportive but ageing. They wrestle with personal and financial responsibilities and dream of more control, wealth, time and purpose.

If this excites you, you are coachable, willing to change, and want to stop going around in circles, then find out more at jeremydeedes.com

Then, take your next step and explore your way forward with a Mapmaker, a one-off online coaching gig to help you decide your options, assess our compatibility, and determine whether we are the right fit. Mapmaker is excellent value, held in confidence and without further commitment.

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Your views are important, and your fellow readers would love to hear your opinion, so share your thoughts in the comments box below, and thank you for your time and generosity.