How to Make a Plan for Your Money That Works

The most successful people in life understand the importance of planning, especially when it comes to money. Those “get rich quick” schemes you always hear about rarely work. And, even when they do, this suddenly wealthy person is just as likely to spend all that money and become suddenly broke again.

Why is that? Because they never made a plan for their money. In other words, they never made a budget.

Now, I know what you’re thinking: Ugh, the dreaded “B” word. Sure, creating a budget and cash flow plan doesn’t really sound like much fun. But doesn’t it sound more fun to go on a vacation with your friends or family and come home without worrying about credit card bills and debt?

That’s what you can do when you make a plan for your money — one that involves dumping debt, cutting up credit cards, and living debt free. You’ll give up on your money goals much more quickly if you don’t have them written down.

So how do you start to make a plan that works?

1. Figure Out Your Income for the Month

Start by determining how much money you have to work with for the upcoming month — before the month begins. This includes your income, your spouse’s income and any extra income you and your spouse are bringing in.

Find Out: 50 Ways to Live the Big Life on a Small Budget

2. Make a Zero-Based Budget

Next, spend every dollar on paper, on purpose, before the month begins. Of course, you can also make your budget online with the free online tool EveryDollar. You see, every dollar should have a name. This is called a zero-based budget, and it works. When you’re planning for the month ahead, you should be able to subtract your expenses — outgo — from your income to equal zero. When you’re done writing the budget, you shouldn’t have anything left over — that’s why it’s called a zero-based budget!

3. Make Budget Adjustments

Third, remember that a good plan changes as your life changes. This means you’ll need to review your budget each month as the year goes on to make adjustments. If you budgeted too little in one area, then adjust. If you budgeted too much in another area, then adjust.

If you’re new to budgeting, you might take a few months to get the hang of it, and that’s okay. But, soon enough, you should have a budget you can rely on.

Remember, a budget isn’t about complicating your life. It’s about knowing where your cash is going and making your life a whole lot easier.