30-Day Funding

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30-Day Funding vs. Paycheck by Paycheck Funding

In today’s economy it’s natural that a lot of people are living paycheck to paycheck.  That’s not a bad thing, as long as you are living within your income and your balanced spending plan.  However, if you can fund your envelopes on a monthly basis, rather than paycheck by paycheck, it will help to simplify your money management.

You may be wondering how this 30-Day funding works.  It goes basically like this…  on October 1st you would fund all of your spending envelopes for the entire month.  Paychecks that come in during October are placed in the Income Cash Pool and saved until November 1st.  Then on November 1st you fund all your envelopes for the month.  Paychecks that come in during November are set aside and used to fund your envelopes for December.

Funding your spending envelopes monthly helps you to more easily keep track of how much you have available to spend.  It eliminates the guess work of trying to remember if you are going to fund that envelope again with your next paycheck.  Let’s say for example you fund $600 in your Grocery Envelope on October 1st.  That means you will have roughly $150 each week for groceries throughout the month.  If you tend to go to the grocery store twice a week, than you have roughly $75 for each trip to the store.  You of course also have the flexibility to spend more on one trip to the store if you are stocking up for the month.  Then you can spread the remaining money out over the next few weeks.

30-Day funding will also reduce the amount of time you spend in the Mvelopes application.  And don’t we all have plenty of other things that we could be doing with our time?  Funding paycheck by paycheck takes extra time each week or each pay period, whereas monthly funding takes only a minute or two once a month.

Perhaps the most important element about 30-Day Funding is that it gives you a 30 day buffer.  If you have a change in income or a change in spending needs, you have a 30 day period in which to make adjustments to your Spending Plan before you need to fund the envelopes again.  This can be especially important if you have a loss of income.  Even if you lose your job, you already have the money on hand to fund your envelopes for the following month.

Not everyone has enough cash on hand to be able to fund 30 days in advance right from the beginning.  Simply build a 30-Day Funding envelope into your spending plan and start setting money aside in small increments towards your 30 day goal.  Once your 30-Day Funding envelope has the equivalent of 1 month’s income in it, you are ready to switch over to the monthly funding schedule.

-Jennifer Streiff, Money for Life Coach

Applied Principle #7 – Spend less than you make

applied_principles_07Money for Life Applied Principle #7 – Spend less than you make

The key to building wealth is spending less than you make on a consistent basis.  “A person will be much more successful in achieving true, long-term financial fitness if they focus first on living within their means. The true secret lies in the way we choose to spend our money rather than in the way we choose to earn our money. While there are many ways to earn money, there really is only one way to accumulate wealth-spend less than you make!”

People will sometimes think, “If only I made more money, I wouldn’t need to go into debt.”  However, their income level isn’t usually the issue.  The issue is how they are spending their money.  In order to accumulate wealth and stop accumulating debt, they need to live within their current income level and spend less than they are bringing in.

It’s not always easy to do this, but the long-term benefits are definitely worth it.  Think of it in terms of operating a business.  “Each of us has a personal company to manage. We have sales in the form of salary or income. And we have costs in the form of house payments, transportation costs, and general living expenses. If we want to create a financially healthy enterprise, we must make choices to spend less than we make. The flip side to this approach leads to an increasing debt load and a complete lack of resources to meet the needs of future spending requirements.”

Get started by creating a spending plan that will allow you to live within your means and set money aside for future expenses, including savings.  Once you have created your plan, focus on living within that plan and within your spending envelopes.

Contains excerpts from Applied Principle 7, Money for Life, by Steven B Smith