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    3 Tips and Tools to Build Your Spending Plan

    Planning your spending, aka budgeting, is a learned skill. We don’t all magically know how to be smart with money!

    Whether you’re new to planning your spending or want to step up your skills, here are some tips and tools to help you work a little smarter.

    3 Tips to Build Your Spending Plan

    Tip #1: Plan Large, Spend Small

    This idea is to plan for the higher amounts that you expect you might spend in a month. Most of us build a spending plan and try to “save” money in the budget by planning for the lower end of a range. For example, maybe you typically spend $350 to $450 a month on groceries. If money is tight, you may build a spending plan around $350 a month, because that’s what you think you can afford. It seems logical.

    But then you actually spend $375, or $425, and you’re scrambling to find that money from another category. Worse, you’re dipping into savings or putting those groceries on a credit card that you can’t pay off this month. By planning low, you’ve doomed your spending plan from the start.

    It’s much better to plan that you will need to spend $450 on groceries. If you find good sales or otherwise keep the costs down, and only spend $375, you can re-allocate that extra $75 to paying down debt or building up your emergency fund, or even doing something fun as a reward.

    This idea comes from the blogger Femme Frugality, who calls it The Golden Rule of Budgeting. I was a fully-capable family money manager when I learned this rule, and it blew me away.

    Tool #1: Paper and Pencil

    Many of the best spending plans are created on paper. Whether it’s a fancy form, page in your planner, or the back of an envelope, physically writing things engages your brain differently than using an electronic tool or an app. Not that there is anything wrong with electronic tools or apps, of course—we’ll talk about them next.

    3 tips to Build Your Spending PlanImage from Canva

    Tip #2: Plan for Irregular and “Unexpected” Expenses

    One of the big mistakes in planning your spending is to plan for things you know you’ll need to spend each month. That’s essential, and may be all you can manage at first. But the long-term goal is to plan for ALL your expenses, even the ones that don’t happen monthly or only happen occasionally.

    For example, most people have an eye exam once a year or so. If anyone in your family wears glasses or contacts, those expenses are also usually annual. In my case, we spend around $600 a year, per person, on vision expenses. (Yes, our eyes are that bad.) So we put $50 a month, per person, into our vision care account. If we need all that money, we’re thankful to have it available. If we don’t spend it one year, it can build up in that account or be allocated for another use.

    Most people can’t start planning for everything at once, so start small and grow. Things you’ll eventually want to include in your spending plan include:

    • Vehicle maintenance
    • Health care expenses, including deductibles and co-pays for medical, vision, and dental
    • Home repairs or household goods like furniture, appliances, etc.
    • Clothing, shoes, and uniforms
    • Travel and vacations
    • Kids’ activity expenses
    • Pet expenses
    • Charitable giving
    • Holiday spending
    • PCS moves
    • Transition funds (if you’re on active duty, you will eventually leave the military!)

    You may hear these types of savings called freedom accounts, sinking funds, envelopes, buckets, sub-savings accounts, or other names. They all mean the same thing—saving for future expenses a little bit at a time so that you are prepared when the expense occurs.

    You can save for these unexpected expenses in many different ways. Some people do well using real money in physical envelopes. Others put all the money into a single bank account and keep track of how much is set aside for each purpose. Another way to manage these funds is to open actual separate savings accounts for each category.

    Tool #2: Computer-based Tools

    Some people prefer to use their computer or tablet to manage their money. Using spreadsheets like Excel or Google Sheets, you can build a format that works for your individual planning style. You can use a separate tab within a single spreadsheet for your various freedom accounts, or use a word doc to make a printable sheet where you track each month’s income and expenses. It may take some trial and error to figure out what works best for you, and that best way will change over time. I’ve used about five different ways of managing my money across my adult life.

    Concentrated bearded young man using laptop while his friends studying togetherImage from Canva

    Tip #3: Increase Your Financial Knowledge

    Make an effort to learn a little bit about money every single day. Whether you read a blog post, watch a TikTok video, or just read your bank statement, those little actions will eventually make you really smart about money.

    If you’re looking to learn more about your military pay and benefits, I recommend my website, KateHorrell.com, or others who work in the military space including Jerry Zeigler of Better Financial Counseling, The Military Money Expert Lacey Langford and From Military to Millionaire. There are many other resources out there; I can’t possibly list them all here. Just be sure to check their credibility and do some research if things seem off or too good to be true. There are bad actors who want to make money off military folks without providing accurate or helpful information.

    Tool #3: Web and Phone-based Apps

    There are many different web and phone-based apps that can help you track your money. Some have a free version, and many have a small monthly cost. One of the most popular programs is You Need A Budget (YNAB), but other well-rated options include HoneyDue, Qube, and Mint.

    You may also have a spending plan and spending tracker tool within your bank’s website. Your bank or credit union’s offer might be perfect for you, but they do tend to be a little less flexible and user-friendly that the stand-alone apps. But again, use what works for you!

    There we have it! Three tips and three tools for building a spending plan that will work for you and your family, no matter where you are in your financial journey.

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    Kate Horrell


    Kate Horrell

    Kate Horrell is a military spouse and expert in the personal financial issues facing military families. During her husband's active duty service, they've bought several houses and been landlords for over 20 years. Her passion is helping military families make the most of their pay and benefits. Find more from Kate at her site, Kate Horrell: The Military Finance Coach.

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