A Budget is…
A budget is where people make a list of their incomes, and often there is usually only one or two. They start with incomes because it is easy. Then they will list their expenses. All of their expenses will be averaged down to a per pay cycle. You might pay your rates twice a year, but you would add up your annual cost and divide by 52 if you get paid weekly or 26 if you get paid fortnightly so you can compare that part of your budget with your income. So you end up averaging all your costs down into a per pay amount then you add up your costs on one side, You look at your income on this side and your expenses on that side and you ask the question- “Does this work?” And if you have more income than expenses you’d go “Yes”, and if you have more expenses than income you’d go n”No”, then you would go back to your expenses and see what you could chop out or think about how you could increase your income. The problem is, and it’s a wonderful exercise to go through, although it’s a big waste of time, but it’s a wonderful exercise if you have never done it. But at the end of it, all you’ve got is a document that says, “Hey, you guys should be able to pay your way, You should be able to make ends meat.”
A Spending Plan is . . . the Answer!
A spending plan is a document, it’s a live document that says, “Here is HOW you make ends meat.” The first thing that’s different to a budget is the amounts we put into the spending plan are not an average of this much per week for rates, this much a week for phone, this much per week for car registration, blah blah blah it’s how much do you need when this thing happens and when does it happen next and it will make the money pop up on the date that the bill arrives. The money will pop up and say, “I’m here for the bill” which is telling you HOW to do it. Join the dots, follow this road map. A spending plan is like a roadmap or a GPS for your money. Where a budget is a road sign that says, “somewhere over there is money success”, a GPS says if you get off track it shows you how to get back on track. A spending plan is a vast difference to a budget.