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Not every family needs a full monthly or weekly budget. For some, a personal spending plan is a much better choice. Learning how to create a spending plan is not hard at all. In fact, it’s much easier than learning how to create a budget!
Here’s a secret you didn’t know about me; I am really bad at living on a monthly budget. Okay, I’ll clarify, I am really bad at living only on a monthly budget. Part of it is because we have two different paycheck models happening in our home; weekly and irregular. The other part is because I am so forgetful most of the time. I create the budget and then other things fill my mind and I totally forget to keep it updated. Then, before I know it, we’re off budget and things are crazy financially.
Needless to say that it only took a few times with that happening for me to realize that I have to take an extra step with my monthly budget. I needed something that would keep me on track and stay in the forefront of my mind a bit better.
For me; the answer to my forgotten budget issue is a weekly spending plan.
How to Create a Weekly Spending Plan
For us, a weekly spending plan works best because of how differently our paychecks are. Steve is paid weekly, however, my paychecks come through at different times of the month. I know what week they come but the dates are different every month.
Since I know what weeks I’m going to get paid and I know how much I’m getting paid, it’s a perfect fit for that spending plan.
What is the Difference Between a Budget and a Spending Plan?
At first glance, a budget and a spending plan may seem the same thing but in my mind, they are not. Now granted, I am no financial guru and I certainly will admit that there are plenty of folks out there who know far better than me.
To me though, the difference between a budget and a spending plan is very evident. When you create a budget (Six Dollar Family), you will generally lump income and expenses together in large categories. Yes, you may know that your electric bill is $400.00, but that is all you know. You know that at some point this month, you will need to pay $400 out to the power company.
However, when you create a spending plan, you actually tell yourself when you will pay that $400 and how. You can nail it down to which specific paycheck that bill is being paid. In other words, it allows you to control exactly where you money is going and when it goes there. If you follow Dave Ramsey (Amazon) at all, “telling your money where to go” is a concept he is pretty big on.
Another major difference that I see is that with a budget, they tend to begin at the start of each week month. The beauty of a spending plan is that they can quite literally be started at any time you choose; even in the middle of a week.
Before You Begin
Before you begin, you’ll want to make sure you have a good savings account. Having a spending plan will not only help you get on track financially quickly – especially if you’re living paycheck to paycheck right now – but it will also start to build savings pretty quickly if you stick to it.
If you don’t currently have one, I highly recommend checking out Qapital HERE. They’re great for not only saving money, but for help with spending issues and building wealth as well.
Steps to Creating a Spending Plan
Before you start creating your spending plan, you will need to determine which type of budget you use. There are only a couple that most families use. A zero based budget or one that rolls over each week.
If you’re not currently using a zero based budget, I highly recommend you begin to. This post HERE explains exactly what a zero based budget is and why you should use one. As we work through creating your spending plan, I will be assuming you’re using a zero based budget. If not, feel free to alter the steps to fit your own family.
To start, you will need all income and expenses your family has coming in or out for the next four weeks. If a bill is late and you’ll need to pay late fees, be sure to include them. You will also want to be sure you account for any online processing fees as well.
One of the easiest ways to keep track of these is by using a printable expense tracker like THIS one (Etsy). If you prefer a book style tracker, THIS one is amazing (Amazon) and has a lot of other features included.
Putting it all together
When you are creating your spending plan, You can literally start any day of the week. If you want to begin tomorrow, then your plan first week will begin tomorrow. I, however, prefer to run ours based around Steve’s paychecks since his are the more regular of the two. This means that ours runs Monday to Sunday each week.
Whatever day you’re starting with, starts week one. Figure the dates up and with them, add your income to a sheet of paper, spreadsheet or document for that week. It is perfectly okay if you aren’t certain of the exact amount. An estimated guess will do just fine.
Next, figure out which of your expenses must be paid that week. If something has a due date, obviously you will want to attempt to get that bill paid when it’s due. Once you have the bill added to your document, subtract the amount from your income. This is how much money you have left to work with.
Continue to add expenses until all necessary expenses are covered for the week or your income is too low to continue. If you happen to have any income – even if its just a few dollars – roll it over for the next week.
Yes, I know I said zero based budget. Hold tight. We are getting there.
Repeat the process using the next weekly period, but this time, include the income you rolled over from last week as “incoming” income. In other words, keep that excess you had last week untouched until this week.
Fill out your other income and expenses the same as the week before and repeat for the next two weeks.
Okay, great, but does this help me save money?
Yes! Of course it does!
Once you’ve done four weeks of your spending plan, you’ll have a choice to make. You can either zero your budget out or you can continue to roll the excess funds into the following weeks.
I recommend zeroing out your budget. All this means is that you take the leftover funds and put them into savings.
When you create your spending plan for the next four weeks, you will start with $0 rollover. This is an amazingly quick way to build an emergency fund without feeling any pain from extra savings.
What Do I Do When My Expenses Are More than My Income?
Unfortunately we all find ourselves in this situation sometimes, but it doesn’t have to lead your family headfirst into a financial crisis.
I’ve said it before and a lot of others have to. The answer is pretty simple; if you don’t have enough money in your budget, you have two options. Either cut your expenses down or make more money.
This could mean doing something as simple as taking a second job, starting a home based business, signing up for online survey sites that will pay you to complete surveys and offers. or even starting a blog like this one.
Yes, there are legit survey sites out there. You just have to know where to find them. I have a list of ones I have personally tested and been paid from right HERE.
If none of those ideas appeal to you, you’d best get to cutting down how much money you’re spending then. Otherwise you’re going to find yourself in a world of financial mess.
What if I Underestimate my Income?
More money than you expected is never a bad thing! If your expenses are already covered, feel free to pay off expenses for upcoming weeks or simply to throw it into savings.
Whatever you do though, be sure you account for it and update your spending plan to include the difference. Not keeping your budget updated is one of the biggest budgeting mistakes you can make (Six Dollar Family) And not knowing where you money is supposed to be going is a great way for it to go nowhere but down the drain.
Anything Else I Should Know?
The simple truth is – like I admitted earlier in this post – a budget is not right for everyone. For some, a budget is all they will need. For others like me, they will need something “more.” Still others do perfectly well not having a budget at all.
But, if you’ve never given a weekly spending plan a try, I would say to go ahead and give it a shot. You never know what it may be able to do for you, your family and your budget!
And in the end, all you really have to lose is less than an hour each month and a few minutes a week to update it!