The cornerstone of financial planning is this question: What does it cost to live?
What do you spend on entertainment each month? What about food—groceries at home along with eating out? How about transportation? Travel? Clothing? Gifts?
Spending and lifestyle are closely related. Would you like to maintain that level of spending and lifestyle when your primary income stops? Most people do, but surprisingly, most people don’t know what those numbers are.
The transition we call retirement will be much more enjoyable if we plan for it well in advance. No matter where you are in your career journey, now is the time to be saving, investing, thinking about what you’ll be doing when you’re no longer working, and how much you want to spend.
It’s not just about managing expenses in your golden years, it’s about doing it now. You want to be prepared no matter what happens or when—whether you end your current career on your terms, or you experience an unexpected, involuntary loss of income.
The first step is to figure out what you’re spending now. Most of us have multiple credit cards and perhaps even multiple bank accounts, which can make it a challenge to track where our money is going. You might know the total of how much you’re spending, but you aren’t clear on the specifics—and that’s not healthy.
Bring light into the darkness by leveraging technology to see exactly what you’re spending and whether you approve or disapprove of each item. Treat it like a business—be the CFO of your family finances. If your financials were out in the open for everyone to see, would you be proud or embarrassed?
There is a wide range of software tools that you can use to track and manage your expenses. I don’t think anyone enjoys combing through bank and credit card statements and extracting and organizing information. Let technology do the heavy lifting for you. Some of these tools are free, some are paid. It will take some effort to get it set up, but once you do, it’s easy to maintain.
Once you know where your money is going, you can work on creating a spending plan for your income and expenses that will accommodate your necessities and luxuries. You may have a love-hate relationship with this process in the beginning, but you’re likely to be surprised and determined to make some changes with the new perspective. When you can clearly see your financial situation, you’ll be able to steward with excellence all you have been entrusted with and live out of true abundance.
In ancient times, before we had currency, people bartered with what they had—livestock, produce, or whatever. They had to manage those assets carefully.
Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations. (Proverbs 27:23-24, NIV)
Do you know the condition of your flocks? If you need help getting started, call us. We’ll be happy to make recommendations based on your specific circumstances.
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