I’ve been looking forward to a certain Saturday morning in late December for a while. Why? Because I want to know if I can put new windows on my house this year. And I want to know if I can afford some extra landscaping help before my backyard turns into a wildlife preserve. (That’s just not my style.) Oh- and I want a lot more clothes this year. And maybe more of those three day weekends, where I actually leave the city. And I think I need more of this and I want more of that…
So a couple of Saturdays ago, I finally sat down with my magic crystal ball. I was a bit nervous what I would see in the ball. For extra support, I stayed in my pink fluffy bathrobe, grabbed some of those Christmas cookies my mom made and brewed the best cup of coffee. For extra measure, I poured some eggnog in my cup, instead of milk. Then I called up The Crystal Ball and set to work.
(Lights darken, crystal ball begins to glow, getting brighter and brighter, mists swirl in its depth and begin to part, and I lean forward, peering into the future….)
Two hours later, I had all my answers. Well, I had a lot of answers and I wanted time to think. To feel. To journal. To digest the future I had just seen. This future seemed to have several scenarios and I was going to have to make some choices. (I am reminded of that saying, “You can have anything you want, but you can’t have everything you want.” Rats.) And it’s true that you can’t change what you can’t see. Now I had “seen” it all. Yes, I would need to make some changes to my oh-so-beautiful plans for the year. So I poured another cup of coffee. With eggnog.
Each year I go through this ritual, and I simply can’t imagine living without a crystal ball. The crystal ball is my annual spending plan. Some call it a “budget”, but I really hate that word and I don’t even let my money coaching clients use it. It’s a PLAN. My plan. I create a plan every month to guide me through the month. Wow. It’s truly hard for me to imagine not having this monthly guiding light. But every December I take it to the next level and plan the entire year. I do for myself what I help my clients do.
I think about all the things I really want in the coming year, and all of the things I need. (I really need windows. I really want more travel.) I think about the reality of my life and what large expenses will come regardless of my love of them—car repair, my son’s orthodontist bill. I think about my goals and my dreams for the future.
When I work on my annual spending plan, I have to balance all of my needs and wants against the money I have coming in this year. Oh- that part. But there is a fundamental truth to money that doesn’t change: you simply cannot spend more money then you have coming in. Well, you can by using debt or draining your assets, but in the long run, there is great unhappiness and stress down that road. So when I create my annual plan, I do indeed compare all of my desired (and undesired- let’s be honest here) outgo, with my projected inflow.
Working with an annual spending plan is where art meets science. For 15 years I’ve helped people feel more in control of their finances, and hence their life. It’s certainly true that money is not the most important thing. But I find that when people have a clear plan and have a way to actually follow their plan, they think less about money and can then settle down and focus on what is important in their life. I have definitely found this to be the case in my own life.
Well, for now, I’m still working on my own annual plan. The crystal ball showed me several futures and now I do indeed need to make some decisions. I need to chart the course for this year. That’s the beauty of the crystal ball. It merely shows possible futures and outcomes. It shows me where I will be financially come next December if I do various things. Nothing is set in stone. I get to ultimately decide which path I will go down. Then I can relax and put some time into my hobbies, my family, my friends, my life.
I love the feeling of being in the driver’s seat of my own life.
Terminology can make such a difference! I love that you use the term “annual spending plan.” I’ve been wrestling with my 2011 budget, and I really wasn’t enjoying it. I feel much more positive about creating a spending plan. So, thank you, Mikelann!
Mikelann,
Any tips for getting your spouse on board? It is difficult when one is always saying no we don’t have the money for that and the other is more wiling to spend with out concern for where the money is going to come from.
rather than a spending plan, I feel a need for an earning plan. I never have any trouble spending money. It’s the
earning that has been my issue. That said, it’s also a plan of mine to have concrete goals this year in three areas: health, emotional/spiritual, and financial. I am working on annual, monthly, and weekly goals. The idea is
to build the habit of consistent steps toward my goals with
small actions every day. Today, my responding here counts.
Thanks – I find your web information very useful.
Part of our end-of-year ritual has come to involve doing our annual spending plan exercise together. When times are good, we’ll steal away to a beautiful location to retreat for the long weekend. In the last couple of years, however, times have become more challenging, and our exercise has ended up taking place at home instead. The results from planning two years ago were sobering; this year, they are downright scary.
Nonetheless, we would always rather greet the new year from an informed place. We are so grateful for the guidance and wisdom Mikelann has given us over the past five years, and we are confident that this knowledge will help us to better our situation in the months and years head.
Here’s to a great 2011 for everyone!