If we are working to pursue our calling, we might discover that this is pretty difficult when we’re continually strapped for cash and our money is chaotic. So, we might decide that we need to get this beast (our finances) under control.
Tracking
If we ask the typical CPA what we should do to get control over our money, many of these folks will tell us to start tracking our spending. They’ll say, “Track your spending for 3 months.” After this, we’re supposed to write down in our budget how much we’re spending. From a pure mathematical point of view, this makes sense. How else do we know what amount to budget for electricity or dining out?
The trouble with this approach, however, is that it leaves us stuck in a reactive (at best) or passive (at worst) stance with our money.
What typically happens is that we start tracking, but we don’t really track it all that well, so we try harder to track it next month. And the month after that, we’re still trying to track our money better. In six months, maybe we fell of the wagon, and we recommit to track our money. And 12 months later, we still don’t have a budget we’re working with. Sure, there might be a budget displayed in Quicken, for example, but we’re not really living by it.
Somewhere along the way, we might even get the idea that all we need to do is track our spending to be good with our finances. We think “I know where every penny has gone.” So we focus on tracking all the ways our money has exited our household.
This is like sledding down a steep, snowy hill, facing backwards. We can see all the ways we’ve already gone, but we’re not looking ahead to see what’s coming. So, the months go by, and all of a sudden, ‘wham!” – our kids need new clothes. And another, “wham!” we’re hit with school pictures. Suddenly, “What!? A car repair? Who knew that would happen?”
See? The tracking isn’t helping us make better decisions with our money – it’s not helping us prepare for life’s events.
Really, I’m not bashing the tracking of our money. It’s just not enough by itself.
Planning
What we need instead is a good spending plan. Instead of just tracking our money, we need to plan our money. A good spending plan lists out where every dollar of our income will go in the coming month. Some will pay bills, some will be saved for future bills, some will be spent for fun, some will be set aside for retirement, you get the idea.
A spending plan looks forward. We can look ahead and think, “Look the kids will need new clothes soon. The car will need repairs of some kind, probably, each a year. And hey, Christmas is coming in 3 months.” So, we can plan to set aside money for these things. This helps us see that since we need money for kid’s clothes, Christmas, and car repairs, we really don’t have the extra money for that impulse trip to Disneyland like we thought.
We can even just decide an amount on, for example, dinning that has nothing to do with our past spending. We can just decide we’re only eating out 4 times this month. It costs the family $50 to eat out, so we put $200 for dining for the month. We didn’t need to track past spending to make this decision.
Planning our money takes out a lot of the “management by crisis” that we’re so used to. We get to put our money toward the the things we care most about, and we can spend our time and energy focusing on other things – such as our calling.
We shouldn’t let our finances hold our calling hostage. Instead our finances should be supporting our calling. So, we make the spending plan first, then we track to see how we’re spending against our plan. If we have to forgo one of these, skip the tracking and keep the planning.
