Definition: PSP is a personal spending plan, a.k.a. a budget, a.k.a. I tricked you by not using budget in the title to get you to read a blog about budgeting. Look, I get it. Budgeting is hard, but I think it’s because we make it harder than it has to be. When I was going through my weight loss phase I was given a simple task: eat fewer calories than you burn each day. To be able to do that I had to know two things – how many calories am I burning and how many calories am I consuming? I didn’t do the really hard or complicated things like buying a food scale to measure out every calorie or visiting a lab to test my resting metabolic rate. Instead, I started with things that were easily accessible, like researching online to figure out a close guess of what my metabolic rate was and reading the labels of the food I was eating. I increased my exercise and decreased my calories and you know what happened? I lost weight. Budgeting or building a Personal Spending Plan is the exact same.
There’s no need to analyze every penny or to spend hours trying to figure out your equation. I performed a little research on Google which lead me to this website and found information on what an average family or individual is spending on certain budget categories. For example, I found that average family of four spends between $850-$1160 per month on groceries. Obviously, your family may be different, but if you are way above this range you should look at this category.
I have included a sample budget I found on the previously mentioned website that lists the percentages average families are spending on certain categories. Use this as base for how many dollars you should be spending in certain areas each month. Become aware of the money that you are spending. Most credit cards and banks have online tools that will tell you how much are spending in certain categories and by identifying your weak spots you will gain a better idea of where you need to cut back and where you can splurge.
Please know the chart below is based on data gathered nationwide and every family is different and there are many different belief systems that dictate what’s right for you.
If dieting was easy, everyone would look like Mario Lopez and if budgeting was easy, everyone would be rich. I don’t think budgeting will ever be fun, but it can be less complicated and it is so worth it. If you need help or just a kick in the pants, call me.
P.S. I lost 60 pounds in 5 months and I take very little credit because I was shown a plan and had proper coaching from people that wanted me to succeed. I want you to succeed too.
National Average Budget Category Percentages of Net Income
|Category||Percent of Overall Spending|
|Housing (mortgage/rent, Real estate taxes)||24%|
|Utilities (water, power, garbage collection,||8%|
|Donations/Gifts to Charity||4%|
|Savings and Insurance||9%|
|Entertainment and Recreation||5%|
|Transportation (car payments, gas, service)||14%|