3 Strong Motives to Plan Monthly Expenses in Advance9 min read
When I first came to a new city, with a new job and a totally new environment, I was nervous instead of being excited. There was some kind of hidden fear inside me. Maybe it was the fear of being completely independent and responsible in life for the very first time in my whole life. I was in a very different situation, hard to tell. On top of that, the new city was way too expensive. Nobody planned for these unplanned expenses beforehand, therefore, the situation worsened. That was the moment when I first realized the value of planning monthly expenses beforehand. From that time I always Plan Monthly Expenses in Advance.
In this article, I will share my life experiences to express the importance of planning monthly expenses in advance. Here it goes, The 3 Strong Reasons to Plan Your Monthly Expenses Beforehand.
#1. You Pay Yourself First
You might have heard investors and rich people saying this phrase or sentence that You Must Pay Yourself First. But, what exactly is the significance of this statement and what good does it bring for you? How planning your monthly expenses can help you pay yourself better? Don’t worry, you will know it once you read it.
When people give you their best advice on wealth creation, they are not wrong. This is one of the simplest advice ever given by some rich lad. Pay Yourself First, simply means that you take out the part of your income and invest it first before you pay your bills. This simple practice will help you to create long-term wealth and security. A wise man once said that he can tell the state and standard of your living merely by looking at your finance sheet. And he was telling the truth. Simply, by looking at your cash flow, I can tell you the state of your living and the direction you are headed towards. Believe it or not but it’s all there.
An example is often helpful in getting stuff better…
Let me explain you this with a real-life situation. Suppose, you are a salaried person, working in a 9-6 plan and getting paid at the end or the start of the month. What will be your spending habit?
If you come in the 70% population living on this planet then you would probably start by paying your house rent, electricity bill, gas cylinder, internet, etc etc.. After that you would put money on your stuff, like buying clothes or cars :/. In this scenario, you are not at all paying yourself first, in fact, your 80% money is getting spent on the stuff which does not increase your overall value. Oh, I have a word for that – ASSET. All you are spending money is building liability and that would not give you Financial Freedom Ever.
So, What Should Be Your Spending Pattern?
This one’s not a rocket science. You already know the mantra, you just gotta apply that in your daily life. Now, as soon as you receive your salary, you gotta spend that money on your assets and not liabilities. Your assets are your investments that pay you returns. You must first spend your money on Mutual Funds, Stocks, Equity, Bonds, FDs, RDs, SIPs, Estate, Website, Business etc etc? anything that has the potential to pay the value for your money.
Automatically your spending habit will improve and you have less money for the less important stuff, therefore, more saving and asset building.
Let money work for you quietly while you sit and relax with your family and friends. Start by paying yourself first. Once you have made your foundation strong, you wouldn’t worry about building an empire over it.
This could be done efficiently if you plan your expenses before-hand. You will have a clear picture of your expenses, investments and savings. This would help you to think better and think straight. I have provided you with a link to my monthly expense sheet (at the end) which you can download and make use of. Expense sheet has really helped me to predict my spending patterns.
I’m calling spending pattern a lot too many times, that is because spending pattern can really help you stay ahead of time. There are instances where you have to spend more than usual. Maybe your car broke down or grocery expense rise or anything. The spending patterns can help you identify the next rise in the coming future with the help of your past record.
#2. You Spend Your Money Wisely
Ain’t nobody spends money on the things which he knows he doesn’t want. Okay maybe not nobody but most of the people do not spend their hard earned money on useless stuff willingly. I’m not saying they don’t buy needless stuff because in reality most of the people are buying stuff they don’t need. All I’m saying that they are never aware of their purchases beforehand. They only mourn over their cash after they have spent it on something useless.
Planning beforehand will help you avoid such pitfalls. You will learn to make better financial choices in your life and make good friends :p
Differentiate And Make Your Life Splendid
All you need to do is differentiate. Differentiate between the stuff that you really want and the stuff that you really need. Both the things are important but there is a major difference. On one hand, you have something without which you cannot live (Needed stuff). On the other hand, you have something which you want out of your desire. This is also very important but the one thing to understand here is that “these things can wait”.
Just with this simple knowledge of Needs and Wants will help you to take better financial choices. Although I said that your desires can wait, that would be wrong too. The whole part to complete the phrase would be,
Desires are the driving force of an individual’s life. If You don’t have a desire, you are not living your life. I’m no religious Guru but that is what I have come to know so far through my life experiences.
Desire, put your head down and work and work and work. Work until you make your desires a reality. This is where your planning and knowledge of differentiating things will play a major role.
How to Differentiate between stuff you Need VS stuff you Want?
This is not a rocket science. It is pretty simple and straightforward. Often times we overlook the simplest of the stuff that plays the most important role in your life. Here is how you will differentiate.
List down all the things you need to work efficiently every day towards your goals.
If I would have to list down the top 6 things that I need every day in order to move towards my goals would be.
Similarly, list down the stuff that you want. Stuff that you desire for.
Your desires list would definitely be larger than needs but that is the fun part. You will know what you want, hence, you will plan accordingly. Use my worksheet that to keep a track of your changing needs and wants. You just have to subscribe to BMA newsletter and get access to my free library of resources. If you are not interested in subscription then follow the link and fill the form directly on the web and click print the form and save a copy as pdf. Simple writing of your desires and needs would impact your life in wondrous ways.
Plan your expenses accordingly and wisely.
#3 Enjoy Quality Time With Your Friends And Family
Perhaps the most important reason of all, you will find more time to enjoy with your friends and family. This is oftentimes neglected or we don’t get enough time to play with our family. Planning your expenses in advance will definitely help you to find time and moments that you can create with your loved ones. Get the most out of it.?
For how long have you not spent a quality time with your family and friends just because you are out of budget? Well, planning is what you need my friend.
Example Goes a Long Way…
Let me explain you with the help of an example. I will consider the example of a salaried person because they are the people who need better counselling. The only sad thing about an engineer’s lifestyle is that- every day is predictable. You do the similar set of tasks every day.
However, the bad does it sound, it has its own advantages. Predicting future becomes easy. You can also make use of this consistency to plan your future better.
As there are fewer variables involved in your day, you can easily devise a plan to use your money to plan ahead. From #1, you will start to pay yourself first. You need your spending pattern in order to predict the future where the expense rises.
Once you have identified your expensive months it becomes very easy to identify your less expensive months as well. Less expensive months is what we are targeting here. This is the period where you need to make your move and do what your heart says you to do. It is not specific to your family and friends, you can choose to do anything in this whole world.
Believe me, nothing is more fun and enjoyable than spending some quality time with your loved ones and create new experiences. You are not here to work your ass off for nothing. You are here to explore. Explore love, passion, energies and many much more such things. Do not get trapped into a small world of work. You gotta make a decision at this very moment. You will plan your expenses beforehand and take out time to create experiences that actually matters.
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