So you’ve made some goals, you’ve taken stock of where you stand, and taken a first look at where your money is going. Now it’s time for you to make a plan that gets you from here to there.
A wise man once said “I love it when a plan comes together.” While the A-team probably wasn’t thinking of their budget at the time 1 I get the sense that “blowing the budget” might have had a more literal connotation to them , you will rarely find yourself at your preferred destination without some forethought around how to get there. Unfortunately, executing our financial plan is a bit more challenging than instructing Siri 2 Or even ChatGPT to navigate us to financial independence, so let’s walk through the process together.
- Start where you are at. In our previous step, we did a self assessment of where our money is currently going. Let’s use that as a starting point.
- Take the time to go category by category and ask yourself the question “does this spending represent my goals?” One of the primary goals of this site is to break down your options in each area of spending so you can make the tradeoffs that are right for you.
- Set a target spending in each category that moves you toward your goals. For each area where you find an opportunity to spend less, pour that towards your next financial goal.
- Execute the plan.
Ready to make a plan? Let’s take a look at where you stand, but take a moment to challenge yourself in each area of spending. Are there opportunities to trade-off something good for something better?
A few principles to guide you
- Prioritize – you will likely not be able to to accomplish everything at once; decide what your top goals are and .
- Leave yourself some freedom. It can be tempting when setting a budget to cut out everything discretionary in order to get to your destination faster. This is a marathon, not a sprint, so leaving yourself some flexibility can make for a much more successful outcome. If you are married, leaving some “no questions asked” money can also be an investment in your marriage that you won’t regret! 3Speaking from personal experience.
- Get on the same page. I may sound like a broken record here, but if it isn’t just your finances, it is essential that your spouse be “in the boat” with you before you embark on your financial journey.
- Recalibrate regularly. You’ll undoubtedly find some surprises as you track where your money is going. Don’t be afraid to revisit regularly and make course corrections where they are needed.