I want to share with you a couple of components of a healthy spending plan model.

In other words, what are some good components of a good budget? Here’s what happens to most of us. It’s happened to me. Finished college, got a job, got a professional career as an engineer in the automotive industry. We were making $35,000 a year. This was 1992, and I felt like we were millionaires. I thought I wouldn’t know how to spend that much money because it was so much more than that I’d ever had before in my life. I learned that it goes very quickly, but I got raises. I got some pretty good raises, and after two years I switched jobs and got another bump. They kept going

But guess what happened? Our spending kept going up, too. So it didn’t matter how much we made because our spending kept going up. One of the first components… Well, I guess one of the first principles of success with money is to learn to live on less than you make. I had a job that I was very uncomfortable in. I didn’t like it. It was painful for me to go to work. I had another opportunity at the same company, and I switched jobs. I’m still glad that I did. I loved the job that I switched into. It was much better for me, and it gave me more opportunities to grow in different ways. But guess what? It was almost a fourth of my annual salary cut, a pay cut.

We had to go from here, down to here financially, and when that happened, it’s like, “How are we going to do that? That’s going to be painful.” Well, guess what? It was. It was some adjustments, but we made it. The problem is unless you have something like that pushing you to go down a notch on your spending, then you don’t tend to do it unless we have to do it. One of the first principles of success with a spending plan is to learn to live on less than you make because you’ve got to do three different areas that you want to spend some of the money that you make that is not going towards your expenses, your car payment, your house, your food, and all that stuff.

You need to use some of that money to invest, to give to charity, and to save. Those are keys to a successful spending plan that if you don’t have those components, you’re not going to be successful. So some food for thought about this. This is one of the principles I teach in the course Money Management for Working Moms that are designed specifically for working and single moms to help you get control over your finances to get you confident and comfortable in managing your money effectively in less than an hour a week. If that resonates with you, I hope you’ll look into it and find out more about the course.