SaveMillions Logo

Company InfoContact UsHelp  

Learn... Plan... Act... Save

Steps to Build Plan
  Determine cash flow
  Develop initial spend plan
  Develop detailed spend plan
  Create money management plan
  Learn keys to success
  Get help if needed
  Budget Planning Calculator
  Budget Tracking Calculator
  Budget Comparison Calculator (Bankrate)
  Budget Comparison Calculator (CNN Money)
  Monthly Expense Record (pdf)
  3-Month Expense Record (Excel)
  Monthly Expense Record (html pages)
  Monthly Budget Planner (pdf)
  Monthly Budget Planner (Excel)
  Monthly Budget Planner (html page)
Develop a money management plan 

When it comes to managing our money, there are basically four groups of people:

  • The first group, a small but critical minority, knows they are in trouble financially or that they are very close to losing everything. They know they absolutely need to develop a plan, but really don't know where to begin. They often feel lost and overwhelmed, and are sometimes afraid to acknowledge the problem publicly and seek help. In fact, they aren't really worried about a plan as much as just a way to stretch their current dollars so that they can keep a roof over their house, food on the table, and pay their bills. They don't have an emergency fund, don't contribute to a retirement plan, and aren't planning that next grand vacation.
  • The second group, still a minority, actually records all of their expenses every month. They still have money issues, and are probably not saving enough to accomplish their financial goals. While knowing how they spend their money gives them some sense of security, and they are able to pay their bills, they really aren't making any great progress. They know that they should be saving more to fund their goals, but they haven't carefully analyzed their spending and aren't making any sacrifices to fund their goals. They haven't detailed a comprehensive money management plan to improve their situation and will likely be in the same position five years from now.
  • The third group, by far the largest, thinks they already know how they spend their money or they have convinced themselves that it's not important to know how and where every dollar went. They are managing to survive from paycheck to paycheck, and they believe that is normal. They may even be managing to save a few dollars, at least until the next crisis occurs. They have some debt, an inadequate emergency fund and not enough life insurance. They likely haven't started or are inadequately funding their retirement. After all, there's always tomorrow or next year.
  • The fourth group, most likely the higher income earners, is doing okay financially, but they still don't have a plan. They know they should have a plan, and they are probably capable of developing a plan, but they never seem to actually do it. They have savings, they are funding their retirement, and they are living the good life. They probably don't know how much they are spending and on what, and it doesn't seem to matter right now.

Regardless of which group you fall into, you can benefit from a comprehensive money management plan that addresses both spending and savings goals. The following are the major steps in that process.

  • Determine and monitor your cash flow - During this step, which is used repeatedly in developing your plans, you will learn how to track and document your spending, organize your spending into categories, document your income, and then briefly analyze your cash flow result
  • Create an initial spending plan - Based on the results of tracking your spending for a month, you will prepare an initial spending plan for the next month, include expected income and expenses for each week, and then once again monitor your cash flow and adjust your plan accordingly
  • Create a detailed spending plan - Based on your initial spending plan, you will prepare a more detailed spending plan for at least three months. This plan will include monthly savings amounts to address future occasional expenses that are typically billed on a quarterly, semi-annual or annual basis. You will implement this plan, and then continue to monitor your cash flow and make changes as necessary.
  • Create a comprehensive money management plan - Once you learn to be successful with your detailed spend plan, then you will create this overall money management plan. Not only does it start considering your expenses for a year, but more importantly it covers savings needed to address your financial goals. You will define your goals, assign savings amounts, add these to your plan, balance your plan, and then implement, monitor and adjust as needed.

Although this is a lengthy process, each step builds on the previous step. Creating the plans isn't that hard, and doesn't take much time. In fact, the real work is in documenting your spending each month, and that is probably the most important part of this process. Once you actually get to the point where you have a workable spending plan, the process should take less than 1 hour a week. Is that too much time to devote to gaining control of your expenses and discovering ways to fund your financial future? If you have a better way, is it really working and will it dramatically improve your situation so that five years from now you are debt free and well on your way to financial success?

If you are ready to change your financial life, it's time to develop a realistic money management plan. And the first step of this plan is to gain control of your spending and identify available savings to fund your goals. So, regardless of which group you belong to, or how well you think you understand your current financial situation, you can benefit from better understanding your cash flow. Unless you are already doing it, it's time to get started!

Begin the process of creating your money management plan

Get Answers
  FAQ about budgets and emergency funds
  Ask our experts
  Article archive
Most Popular Articles
  Everything you need to know about budgeting
  Your 5-minute guide to budgeting
  Build a family budget that actually works
  50 ways to trim your budget
  Alternatives to get out of the payday loan cycle
Most Recent Articles
  5 steps to building an emergency fund
  12 new 'necessities' that drain your cash
  Help! My debts are killing me
  8 last-minute ways to save for vacation
  Making the most of your paycheck
  Use DIY method of extra loan payments
  Save your 'emergency fund' for the real thing
  Why money trouble comes in threes
  Plugging your budget black holes
  7 painless moves to save $1,000
  New Web tools show consumers how money burns through their pockets