Daily Financial Plan
This Daily Financial Plan article is the final article in our financial planning trilogy.
Continuing our rock, pebbles, and sand analogy, the sand is what distracts most people. It’s the small stuff that adds little value and disproportionately wastes time and money. In our first article in this series, we discussed how filling up your jar first with sand prevents you from adding your pebbles and rocks.
Because you’re prioritizing and filling your jar first with rocks, you’re positioning yourself for financial success.
As an example, we discussed with each other our priorities ten years ago. Our sand was buying clothing and clubbing. When we wanted to buy a house, we weren’t financially prepared. Over several weeks, we discussed our financial goals.
Clothes and clubbing weren’t at the top of our list but they were consuming our lives. Most people can’t have it all and we’re no exception. We can have what’s important to us and a comprehensive financial plan allows for that. Once we realized what was important to us, we prioritized accordingly.
Below are six simple steps we used to create our daily financial plan that feeds into our short-term financial plan that then feeds into our long-term financial plan.
1) Choose one to two daily habits to support your one to two short-term financial goals
An example includes daily packing your lunch rather than eating lunch out. The average American spends $1,000 annually eating out for lunch. A nice vacation can cost $2,000 or less. Packing your lunch each day and saving $500 annually means you’re a quarter of the way to your short-term goal of saving $1,000 annually for a $2,000 vacation. Would you rather have lunch in a Mexican restaurant near work or a vacation in Mexico?
What other small habits can you adopt that will make it less painful to achieve your short-term financial goals? If you need help deciding, try this free financial quiz.
2) Adopt mentally stimulating habits
This is another way of saying be money conscious. You don’t have to read Barron’s every week. Sweet Mother Nature knows we struggle. Just know what’s going on in the financial world.
Hit up personal finance blogs each day like us. Check out financial news sites.
Read a financial book or two and learn the basics of finance and investing, such as our book, 4: The Four Principles of a Debt Free Life. You don’t need to take Econ 500. Find a money author that speaks to you and knows as much about managing money as Paris Hilton knows about DJing.
Lastly, meditate. Meditation clears your mind. This clarity effects every aspect of your life. It provides focus. If your rocks are your true long-term financial goals, this daily activity will help you focus on them.
3) Create a daily plan and budget
Just as you need a monthly calendar and budget, you should have a daily calendar and budget. Know what you’re doing each day, so you don’t stray from your goals.
If, on a particular day, your plan is to do nothing in order to save money, know what you are going to do so as to not get distracted. Distractions lead to spending the money you’re trying to save.
Your plan may include staying home and watching a movie on Netflix or playing a board game with the family. It may include calling an old friend or reading a borrowed book from the library or free book from Amazon’s Kindle Store.
When you create your month-to-month budget, budget for social spending. Once you know your budget, you can calculate your daily allowance. Maintaining your daily budget lets you maintain your monthly budget. If you haven’t already guessed it, maintaining your monthly budget lets you maintain your annual budget.
4) Adopt a “cash and count” system
Use only cash for as many expenses as you can. Unless you have great willpower, credit and debit cards can be misleading. Using cash to cover most of your expenses and appropriating your cash in designated envelopes will provide you with a daily count of how much cash you actually have. We use Mvelopes to budget our spending in different categories.
For example, if you’ve budgeted $300 a pay period for groceries and you spend $100 one week, you easily know you can spend $200 on groceries the next week. Or, better yet, spend $100 the next week and put $100 towards your short-term financial goals.
5) Adopt money conscious technology
Set up automatic payments through Bill Pay or electronic funds transfer (EFT) to pay your bills and eliminate monthly chores. Get account statements emailed to you. Sign up for text alerts to warn you about credit card fraud and minimum balance thresholds. Most banks and brokerage firms offer apps for account maintenance and transactions and this Debt Payoff App allows you to calculate when you will have you will have your debt paid off. These tools let you stay on top of how you’re doing financially.
6) Have fun
Have fun! Keep your eye on the prize and make achieving your daily financial plan, short-term financial plan, and long-term financial plan enjoyable.
The closer we get to our savings goal for a particular vacation, the more excited we get. If the stock market isn’t going against us, it’s exciting to see our retirement accounts grow through appreciation and contributions. We have more working years ahead of us, but we can already see those daily strolls on the beach.
Enjoy it. Have fun. Don’t take it too seriously and forgive your mistakes easily.
These are our tips for creating a daily financial plan. Combining these daily financial plan tips with our tips for creating short and long-term financial plans provides you with a comprehensive way to achieve financial success.
Other articles for you:
- 6 Smart Money Tips for Creating a Long-Term Financial Plan
- 6 Smart Money Tips for creating a Short-Term Financial Plan
- 10 Daily Habits to Be Happier, Healthier, and Wealthier