Are you tired of trying all kinds of different tech solutions to manage your cash flow?

Or maybe you’re still burying your head in the sand and simply crossing your fingers that your expenses will be less than your income this month.

The biggest challenge people have with their cashflow is their lack of spending awareness. This is because, for most people, rather than developing a proper spending plan they let their expenses happen to them.

If you want to build wealth you’ll need to take the reins and increase your cash flow awareness.

In this episode, you’ll learn how to build a foundation that allows you to plan your spending and build a solid cash reserve. Press play so that you can stop letting your spending take away your financial freedom.

You will want to hear this episode if you are interested in…

How to create your spending plan

If you’re like most people, your expenses come from the same account that your income goes into. The first step to creating your spending plan is to separate your income from your expenses. To do this you’ll need to set up one account where all your deposits go into and then create separate spending accounts where your expenses come out.

Next, you’ll separate your spending accounts into different categories. Create 4-6 accounts based on your personal spending categories. Some basic categories for these accounts are household, medical, entertainment, travel, and kids. Sorting your accounts like this will give you a better understanding of your spending in each category.

Turn off overdraft protection so that you don’t overspend. You’ll also want to create nicknames for each account and label them appropriately. Make sure to get debit cards for each spending account.

5 tips for making the most out of your spending plan

By creating this modern-day envelope system for your expenses, you’ll create a spending structure and get you thinking about where your money is going. Use these tips to make the most out of your new system.

  1. Don’t be afraid to use multiple cards for one purchase.
  2. Try and fund your accounts at the beginning of each month.
  3. Share accounts with your significant other if you can so that you’ll have to discuss money. Consider setting up a separate account for yearly expenses and things like car and home repairs.
  4. Automate your savings.
  5. Don’t stress about funding your accounts perfectly in the first month.

How to dial in your system

Initially, you’ll want to dedicate a couple of hours each week so you can dial in your system. The goal is to only spend about an hour a month working on your cash flow strategy.

Consistency is key so make your system easy to implement. Keep a cheat sheet with notes to help you improve each month. Strive for progress, not perfection.

At the end of the day, you want to make sure that you are spending less than you earn so that you build up your net worth over time. How will you use this information to improve your spending plan?

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