What Every Spending Strategy Needs

It's no secret that I hate traditional budgets, and I refuse to create them for my financial coaching clients. Why? Because restrictive, cookie-cutter budgets set people up for failure. It's the equivalent of putting everyone on the Keto Diet, no matter their food allergies or preferences.

Sure, you'll get results at the beginning, but at some point, you'll fall off the wagon if you can never have the things you love! It's neither fun nor sustainable for the long-term. Plus, my typical client has an annual household income of $300k - $500k+. They don't need a beans-and-rice budget!

However, having zero strategy for your spending isn't helpful either. It will leave you wondering where the heck all your money went! I'd like to introduce you to a healthier way of managing your spending. You can think of it like the Mediterranean Diet for your money! 80% of the time you eat fresh, healthy food, AND there's still room for a little wine and chocolate.

What Every Spending Strategy Needs

There are 3 things that every spending strategy needs to deliver you lasting financial success: targets, tracking, and flex.

Targets

If you aim at nothing, you'll hit every time! Traditional budgets get this partially right. You definitely need to have goals when it comes to your various categories of spending. What do they get wrong? When setting targets for your spending plan, they should fit your unique family and financial situation. Beware the money gurus who come at you with "recommended percentages" and "rules of thumb." (Or "rules of dumb" as my friend, Kelsa Dickey says!) Your spending targets should be based on the things YOU want to accomplish, not a cookie-cutter of someone else's plan.

It's also important to include both your long and short-term dreams when setting targets. These are also known as the FUN things that make life enjoyable! Yes, of course, you should have goals for paying off debt, growing your income, and investing more for retirement. But you also want to achieve your dreams - like scuba diving in Aruba, self-publishing your book, or sending your daughter to acting camp next summer - while achieving your practical goals. And yes, you can absolutely do both!

Tracking

If you don't track your spending, you'll never know if you're on track to reach your targets! I'm a strong believer in automating the tediousness of tracking your money. Why spend hours entering your transactions into multi-tab spreadsheets when technology can gather, classify, and organize your financial data in mere seconds? Currently, I'm using Mint.com with my clients and for my own personal finances. It's free, it's easy to use, and it shows you all of your important financial metrics in one place.

Signing up for and setting up a personal finance app is a huge step toward getting organized and taking charge of your spending. Just make sure you're using the app on a regular basis to check on your spending! I recommend weekly check-ins for my clients. This ensures that they're neither obsessive nor neglectful of their personal finances.

Flex

Your spending plan shouldn't be carved into stone tablets, never to be changed! It must have flexibility and room for pivots. Why? Because the unexpected happens, both good and bad. We've been told the lie that once we create our plan for our money, we HAVE to stick to it. I call B.S.! Your spending plan is supposed to serve you, not be your master.

My clients and I change and rearrange our spending targets almost weekly to respond to what's going on in real life. As long as you're not spending in excess of your income, feel free to adjust your categories as needed. Don't get so worked up if your spending doesn't match your targets to the penny. This isn't a pass/ fail test! As one of my favorite sayings goes, "Blessed are the flexible, for they shall not be bent out of shape!"

P.S. If you're a high-income professional looking to gain control of your personal finances without resorting to a restrictive budget, let's chat! I have two immediate openings for 1:1 clients.