Identify Your Spending NeedsYour spending plan should be based on needs, not wants. Write a list of everything you need for basic survivial for one month. This should include only basic necessities -- basic food, shelter (rent or mortgage costs plus property taxes), necessary utilities such as electricity, heating, and water, and basic travel expenses. It should not include luxuries such as restaurant food, fancy desserts, gourmet coffee, TV or internet.
The list should identify what your spending needs are, but should not have a cost attached at this point.
Calculate Your Income -- After TaxesYour income should include only money you are sure you will have. It includes money such as earned income, financial benefits, and any other real, reliable sources of income. It does not include imagined winning from gambling, imagined financial gifts or inheritances, or money from savings, unless you have substantial savings and no debt to clear.
Identify and Subtract Non-Negotiable ExpensesFrom the list you made in step 1, identify those expenses that are fixed at this time. This will probably include rent/mortgage/property taxes and essential utilities. Calculate the cost of these expenses per month, and subtract them from your income, as identified in step 2.
Figure Out How Much You Will Spend on Each Negotiable ExpenseThe amount of money you have left at the end of completing step 3 will give you the amount you have left to pay for negotiable expenses, i.e. food and travel expenses. Use receipts to figure out how much you can spend on each of these expenses. You will probably have to purchase food once per week, so divide your monthly food expenditure by 4. Travel may be covered with a monthly travel pass if you are unable to keep track of the cost of running a car. If you want to clear some debt, you could sell your car and switch to public transit, which is at least a fixed amount and is usually cheaper than running a car overall.
Set Up Automatic Payments If PossibleIt may help you to stick to your spending plan to set up automatic payments for your non-negotiable expenses. Put a note in your day planner to buy your transit pass on the last day of the previous month.
Plan Your Grocery Shopping Before Leaving For the StoreGrocery shopping is a high risk time for impulse buying and slipping from following your spending plan. To reduce this risk, select one day a week to do your grocery shopping, and if possible, have a shopping buddy with you to keep you on track. Write out your shopping list ahead of time, based on essential, basic foods that you need. Use you old receipts to figure out how much each item will cost, and stay within your shopping budget.
Buy Your Groceries With Cash, Not Credit or Debit CardsBefore you go to the grocery store, go to the bank and withdraw the exact amount of cash needed to purchase your weekly food supplies. Do not use a credit or debit card to pay for your groceries. Using cash will remind you of the real cost of food, and will place a limit on what you can spend. If you take too much from the grocery shelves, you will have to give something back at the till.
Find Out About Additional Resources in Your CommunityYour local library is a great place to find out about resources that may be available in your community. These vary a great deal from place to place, but you may be eligible for programs which help people with financial problems with the cost of food, or provide donated clothing, or even help with the cost of Christmas. Although no-one wants to use these services, they might make a significant difference to you while you get your spending plan underway.
Get Professional Advice on Financial PlanningThe spending plan you have figured out will keep you in a holding pattern. It will keep you living within your means, but you won't be able to move out of survival mode until you have professional advice on financial plannning. Financial planning is very individual, depending on your circumstances, but you local bank should be able to give you some advice on paying off debts, building up savings, and making provision for the future. Make use of career services available in your community which can help with developing your career and improving your income.
Get Professional Help for Shopping Addiction, Overspending or Problem GamblingCounseling will help you to uncover the emotional roots of your compulsive shopping, shopping addiction, or gambling problems. However, counseling is often expensive and traditional addiction services rarely provide services for shopping addicts, although counselling for gambling problems is readily available. Ask at your local library or social services office about counseling services for people with financial problems -- there may be help available.
Stay PositiveAlthough you may be at a low point in your life, taking the step to create a spending plan shows you are taking responsibility for your own life and future. Stay focused on the positive outcomes of what you are doing by following your spending plan -- freedom from money worries and debt.
Avoid Peer PressureAll addicts find that sooner or later, they need to avoid those friends who reinforce their addiction. It's not a judgement of your friends to admit that you feel peer pressure to shop when you are around them. And anyone who makes you feel unworthy for not having or spending money is not helpful at this stage.
Reward Yourself With AffirmationsAt the end of each day, remind yourself of what you have accomplished. Keep a notebook and write down five things that affirmed your life today. They could range from a positive interaction with someone, resisting the urge to spend, or something that made you feel happy that cost you nothing. These rewards cost nothing and will help develop your self esteem.
What You Need:
- Pen or pencil
- Payslips and/ or payment slips for benefits
- Utility bills
- Grocery receipts
- Scissors to cut up credit cards
- Cashpoint card that won't work as a debit card