FLM Step 25: Lynnae of BeingFrugal.net on documenting your desired spending

In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness–one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, Lynnae of BeingFrugal.net talks about documenting your desired spending.

When getting your financial life in order, it’s not enough to know where you’ve been. You need to know where you’re going. What is it they say? Failing to plan is planning to fail? That’s definitely true when it comes to financial planning.

By now you know what you are spending every month. You know where that money is going. But chances are, you have financial goals you want to reach. Financial goals that aren’t being met by your current spending habits. Maybe your goal is buying a house. Or paying for your child’s college education. Or a trip to Disneyland. It doesn’t matter what your goal is. What matters is that you have a plan to get there.

In order to meet your goals, you need to write them down. And don’t just stop at your broader goals. Write down the steps to get there. Document your desired spending.

A week ago, Frugal Homemaker told you how to track your expenses. Now that you know where your money has been going, you need to make a plan as to where you’re going to spend it in the future.

If you’re like me, you found a few surprises the first time you tracked expenses. I was absolutely shocked at the amount of money my family spent on eating out. $20 her and $20 there really adds up over the course of a month.

The way to make sure you don’t overspend is to create a budget. Or a spending plan. Whatever you want to call it. Sit down and decide how much you want to spend on the different areas of your life. Write it down. Review it often.

Documenting your desired spending is important, because it gives you a plan. And contrary to popular belief, budgets are actually very freeing. Sure, you can’t blow $100 at the mall without thinking about it. But it feels great to have the money available to pay for that unexpected car repair, because you had the foresight to plan for it. And you can still buy things at the mall, if you like. Just make sure it’s in your financial plan, before you spend.

Like any plan in life, a budget isn’t set in stone. Feel free to adjust it frequently, if you feel it isn’t meeting your needs. And make sure you set aside some fun money, too, or you won’t stick to your budget very long.

The bottom line is, without a written plan, a financial goal is just a dream. In order to turn that dream into reality, you need to write down a plan to achieve that goal. Start today. A pencil and paper is all you need. Make a plan. Then follow it.

Lynnae started blogging at BeingFrugal.net as a way to hold herself accountable for the financial decisions she makes. She also hosts an online talk show called Frugal Coast 2 Coast along with Frugal Upstate blogger Jenn Fowler.

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.