Recently we talked about different types of expenses and used a container of mixed up screws, nails, washers, nuts and bolts, etc. to describe some people's finances.
(If you missed that blog, here it is: https://www.spendingplannersinstitute.com/are-your-financed-screwed-up/)
I also said that sorting out finances is not as simple as sorting out nuts and bolts that have been mixed up. Nuts and bolts are really easy to identify and put into separate containers but expenses can be sorted in all kinds of different ways so it's not so simple.
Since posting that, I decided to see if I could come up with the smallest number of expense types possible that would identify every reason we spend money.
I figure if I can make it easier for people to understand where their money goes and why they spend it they will have more choice and more control around where and when it gets spent.
So, I got it down to just six expense types!
Over the next few weeks, I am going to reveal all six. If you think I have missed something once you have read them all I'd love to hear your thoughts!
My aim is not just to help you group your expenses into categories. I also want to show you how to manage these expenses in the best way possible for you.
I'll help you create a budget plan that works for your household, so you have enough money for all the things you need and love, without going over your spending limits.
To start, we'll look at the things you spend money on every single week.
Weekly Expenses - Food, Fuel, Fun and Incidental expenses (FFFI)
I don't think I need to go any further in identifying these expenses. We all have weekly living expenses.
Of course, you could break these down even further, into groups such as essential and non-essential if you wanted to. Chocolate is food and some people buy it every week. Whether it is essential or non-essential or food or fuel, incidental or something else really doesn't matter for the purpose of my six expense types.
Keeping on top of your weekly expenses is especially important if you're trying to save up for a big purchase like a new home. Taking care of all your regular outgoings makes it much easier to make long-term financial plans.
Where to Keep Money for These Expenses
I recommend you set up an 'FFFI' Account that has debit card and ATM access. Using a separate account makes it really easy to create predictability around expenses that might otherwise seem to be varied. You are putting a barrier in place to stop yourself from accidentally messing up your finances over the longer term.
How to Manage this Money
Set up an automated weekly deposit to your FFFI account and allow yourself to spend all this money each week.
If you spend up big on food one week, then you'll have less to spend on fuel or fun — but really you should commit to spending no more than this amount on these expenses each week. If a minor incidental unplanned expense occurs, this is where it is financed from, so be careful not to spend all the money on the first day of the week!
You know this money will be there at the same time each week so it can be relied on and if you don't spend it all one week the surplus will add to next week's allowance.
Next time we'll look at my second expense type.
Where are YOU Headed?
Nothing changes if you don't change something. If you want to improve your life, today's topic is a great place to start!
If you think taking control of your money is all too hard, get someone to help you...go to www.findaspendingplanner.com.
You'll find trained Spending Planners who are extremely passionate about helping people take control of their finances. The benefit will be far more than the cost and it will be with you for the rest of your life!
Work with Us
And, if you're already using my system to blitz your day to day finances and would like to have more satisfaction in your life (and more income) you might want to consider becoming a Spending Planner as well.
Go to www.spendingplannersinstitute.com to find out all about the opportunity.
That's all for today. Keep an eye out for the next instalment!