The First Foundation of Financial Fitness, Ep # 9 

Justin WallerFinance, Podcast

Now that you know the basic foundations of financial fitness, we’ll be taking a deep dive into each of them one at a time. Today we are covering the first foundation: spend less than what you earn.

In this episode, we’ll explore what this means and how you can make this seemingly simple foundation of finance work by using a spending plan. You’ll learn 10 tips to help you design your spending plan, and as with each episode, you’ll have homework to implement what you have learned.

Are ready to share a mile with me so that you can improve your financial outlook and take one step closer to financial independence? Press play to get started.

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

  • Spend less than what you earn [1:02]
  • 10 tips for designing your spending [1:54]
  • Your homework [11:14]

Create a spending plan

It may seem like only semantics, but I like to use the phrase spending plan instead of budget. This is because the term spending plan is more empowering than budget. Rather than fighting with a budget, by planning how you will spend your money, you have more control over where your money goes. The basic formula for a spending plan is income – savings = expenses.

10 tips for designing your spending plan

  1. You get what you earn and what you ask for. You do not deserve a new bike, running shoes, or smartwatch. You must earn them. If they are essential to you, then you will save appropriately in advance and pay for them once you have earned them.
    The money you earn is the starting point for all your financial planning. You get what you earn through discipline and patience. Periodically review your income structure to see if you have earned an increase in your income. Look at what other employers are paying for your skillset. Are you being appropriately compensated for the work you do and the value you provide in the world? If a raise or compensation increase is in order, you may have to ask for it. Asking for a meaningful increase in income can take some gumption, but if you are confident that you earned it, then you should ask for it.
  2. Play the monthly money game. Schedule a regular financial conversation with your partner or your family. This is a great way to discuss what you are trying to accomplish so that you can work together to achieve these goals. Try to time them regularly so that you can find a time that works for both of you.
  3. Give every dollar a purpose. If you don’t give your money a purpose it will find one on its own.
  4. Put your savings on autopilot. This will ensure that you make good decisions automatically. Make it so that bad decisions take effort.
  5. Keep it, simple sweetheart. Your spending plan should only be as complex as it needs to be. Create fewer categories to eliminate confusion.
  6. Spend less time juggling payments. Try to consolidate your payments into one day each month. Having different due dates can create complexity and confusion. By simplifying, you will save mental energy.
  7. Steady wins the race. Minimize variation whenever possible since this is much easier on the spending plan. If your income is variable, consider creating a paycheck by putting all of your money into one account and then periodically dispersing funds to your spending account.
  8. Credit cards are a cash flow trap. Whether you are earning points, miles, or magic marbles, be aware of your spending and the direct impact it has on your plan. Simply put: credit cards make it easy to spend more money.
  9. Have some discretionary spending money. Give yourself an allowance, whether it’s $20 or $200. We all need a bit of money to blow off steam; put aside some money each month that you don’t need to spend on expenses or save
  10. There will be an adjustment phase. Adjusting to a new spending plan is rough try to do a few things on this list rather than tackle them all at once. Let me know how you do with this. Email me and tell me which steps you are implementing this month!

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