A couple of Saturdays ago, I finally sat down with my magic crystal ball. I was ready to create my personal 2012 spending and income plan. I was a bit nervous this year about what I would see in the ball. I really need to convert my house to gas, or at least replace my dinosaur of a furnace. Yikes. And I’ve been asked to join some friends on a big out of country trip. I would like to go! And since I already did my business annual plan, so I know what income I have this year.
So I sat down with a cup of Starbucks coffee, 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.
So I poured another cup of coffee. And found some Godiva chocolate.
Each year I go through this ritual, and I simply can’t imagine living without a crystal ball—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 January 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. (Like travel and new furnaces.) 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.
Of course I put all my normal monthly expenses into my annual plan, but I debate those too. Every year I look at my expense with a fresh eye. Is it time to change cable companies? Am I happy with my hairdresser? (Yes!) Is it time to let go of the hardcopy newspaper? (Maybe.)
When I work on my annual spending plan, I have to balance all of my expenses 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 than 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.
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 beauty of the crystal ball is that 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
Hi Mikelann,
I’m someone who should have been running a few businesses for years, or teaching or coaching, and yet because of childhood expectations that I should not be a leader, or interpretations that I took that way – I’ve never led anything in public. At 31 years old, I offered to “help” by taking my youngest brother from home, only to realize as years went on, that he had Brain Injury and Autism, and adult services were very poorly understood and set up. This focus became a valuable distraction in my life, I am glad I pursued it, stayed loyal to him, when he needed that. The lessons I learned in that long range project of helping him through crises and changes are part of what I now have as a basis for teaching – but I find it very difficult to set boundaries and develop the lessons I want to teach and actually try to use them for my own benefit. I do part time home care work for elders, to bring in money, and through Debtors Anonymous lessons, I managed to avoid new debt in the last 6 years, and to pay down about $35K. I “retired” at 62, and am now 68 – missed home purchase opps, and thus am in a stable setting, but cut off from the world by comfort and age and my part time job (my long term client will not last much longer, she is 105, and failing: this has made my efforts to look into a crystal ball difficult for me this year. My question for you is, if you work for yourself, how do you know how much will come in? Are you not nervous that less will actualy come? I don’t know what to plan, since I’ve made my money in part time home care, family support for my work, social security, and renting rooms to tenants: not for many years, in any projects done by myself. I have years of back organizing to do, for old files – and struggle to stick to the task of sorting papers which I feel I need, the visuals – to be able to count on myself to produce anything – To lessen my anxiety, I need to be developing projects ahead of time, but am always trying to catch up. How do I make an annual plan so little certainty about what will come in??? Thanks, CQ
Hi CQ.
Thaks for your comment. The short answer is that when I do an annual plan, I always plan my income on the lower side, on what I can really count on. I attend to my needs first, then my wants. Then as the year goes along, I adjust my plan with the new information. It helps that I do a business spending plan too, as I often need to adjsut that due to my own erractic income. But it can be done. Adjustments let me go with the changing flow.