Our household contains a river of money. Money comes into our household and flows out into various places. We pay for housing, our health, clothing, recreation, and automobiles to name a few. Money is always flowing through.
Each month, whether we are conscious of it or not, we are making choices about how to direct this flow of money. Whether we’ve thought it through or not, when we go out and buy a new flat screen TV and our kid’s college is not funded, in that moment, we are choosing the TV over our kids future education. Ouch! I suspect that if we were asked outright, we wouldn’t say that we value our entertainment over our kids education.
Spending in the Moment
Unfortunately, for many of us, we direct our money according to one set of values early in life and then later we wish we had directed our money differently. We call this “spending in the moment.”
“Spending in the moment” is when we spend according to how we feel in the moment. Often we spend in the moment because we don’t otherwise have a plan for our money. Sometimes we decide to spend in the moment even when we had a plan – spending outside of our plan. The temptation in the moment got us.
No Longer Good Enough
When we get to a place in our life where we need our life to make a meaningful impact in the world, we can no longer afford to just spend how we feel in the moment. Our money and our life aren’t separate things. Where our money goes, there goes our life.
We might declare that we want to make an impact by giving to a scholarship fund. But if each month, we don’t have the money because spent in the moment, we didn’t really value the scholarship. Instead, we spent that money on other things, for example: we went out to eat 15 times, bought coffee twice each day, and upgraded our iPhone.
If this is our life, we’re not going to get where we want to go.
Instead we need to get clear on our intentions with our money. This is done by writing down a spending plan for our money. We write down our expected income for the month, and then give every dollar a name. We write down our plan for where we want our money to go, including saving some of it. Then we need to spend our money according to our plan. You can check out more information on creating a spending plan here.
It’s not sexy, but with this plan, we get to direct the river of money in our household to the things we value most.
What about you? What’s your best money tip?
