Your financial planner should never tell you what to spend your money on.

A common misconception is that financial planners are boring, frugal, and are just going to tell you to spend less money and save all of it.

This makes you feel like you have to give up your entire lifestyle to start building wealth.

In fairness, our profession has earned this reputation, check out this story 👇

Jacqueline is a fellow financial planner. And she kicks ass.

Could you imagine if you made $400k a year, and EARNED the right to spend, and your financial planner told you not to buy a $10k boat?

FIRED.

There’s a new generation of financial planners 🙋🏻‍♂️ who place an emphasis on living in the now and preparing for the future.

You don’t need someone to tell you how to live your life. You need someone to help you optimize living in the present while saving for future flexibility.

You can continue to enjoy the lifestyle you’re accustomed to but take the time to figure out what you value and prioritize in your dream life so you can cut out the spending that doesn’t fit your dream life.

It’s a delicate balance, but it’s important to prioritize spending just as much as saving.

Here’s how you can spend and still thrive financially and build wealth!

1. Spend on Your Values & Experiences

Your spending should reflect your values. Money is a tool and should be used to help you thrive.

For example, I have a client who is a competitive bodybuilder and her goal was to earn her IFBB pro card this year (She did!! She’s amazing).

Her spending on supplements, body work, and food is probably more than some people’s entire monthly budget. But she VALUES her career as a bodybuilder. 

Do you think I’m going to go line by line on her expenses and tell her to eat less or buy less supplements?

Absolutely not. 

I will however challenge her, by saying “hey if you’re spending X here then you should spend less in these other categories that you said you don’t value as much.”

At the end of the day, as a financial planner I realize that it’s YOUR money not mine. 

My job is to show you the potential outcomes of each financial decision, and then empower you to make the decision that works best for your life.

The cool thing about aligning your spending with your values for awhile, you’ll feel less anxious and empowered to use money as a leverage to live your dream life rather than a carrot you’re always chasing.

2. Track Spending

What you measure gets improved.

If I ask you what you spend your money on and how much do you spend each month, you should be able to tell me. Maybe not an exact number off the top of your head but you should definitely be able to give me a rough estimate of what you’re spending and where it goes each month. 

For tracking business cash flow, you’ll need a spreadsheet or accounting app such as Quickbooks.

For personal spending, you should be tracking using a spreadsheet or a budgeting tool such as TrueBill, Mint, Etc.

You should review your expenses periodically. Preferably long term periods so you can see trends, such as quarterly, semi-annually, and annually. Getting too caught up in the day to day can add unnecessary stress.

Knowledge is power. If you don’t know where your money goes then you’ll never be in control of your finances.

3. Don’t Be Restrictive, Be Realistic

Here’s what I see a lot, people get overly ambitious when setting spending targets. 

If you’re currently spending $300/month eating out, then don’t think next month you’re going to spend $50/month. It’s just not realistic and you’re setting yourself up for failure.

Also, you don’t leave yourself any room to spend on yourself. You’re a successful business owner or fitness coach and you deserve to spend on yourself too. It doesn’t need to all go back into the business and to just your necessities.

When starting out with tracking, focus on the big picture spending such as:

• Fixed Expenses (Rent, Utilities, Insurance, Etc.)

• Groceries

• Eating Out

• Entertainment

• Supplements

If you try to get too granular, such as I spent $107.62 at Starbucks, you’ll cause unnecessary stress on yourself. And you’ll probably quit tracking.

4. Save First, Spend Second

I call this “earning the right to spend”. I didn’t come up with that on my own but I forget where I heard it. But you should be paying yourself first and then spending last.

For example, let’s say you withdraw $10,000 from the business this month. Ideally, 20% ($2,000) should immediately be set aside for saving/investing/debt pay-down depending on your goals. (Don’t forget to set aside 25-35% for taxes if you haven’t already.)

You’ll then have approximately $5,000 to spend on your fixed expenses such as rent, utilities, etc. and variable living costs such as groceries.

Whatever is leftover, you spend freely. No strings attached, you’ve earned it!

If you don’t do it this way, here’s what happens:

You add $10,000 to your bank account. You feel great and buy some new clothes, pay for dinner for some friends, and pay your necessary expenses. Next thing you know, you’re running out of funds. You can withdraw more next month, but here’s the issue:

You didn’t save for your goals and you didn't set aside funds for taxes. Oh boy. You’re on the spending treadmill now.

5. Don’t Use Credit Cards

I always have to clarify here, I’m not against credit cards. I use them for all of my spending both personal and business and love getting rewards.

The issue is when you can’t afford something, and you use the credit card as your crutch. Do NOT do that.

If you don’t have the cash to pay for it, then you shouldn’t be using a credit card to pay for it. 

There can be an argument made for investing into a program, coach, etc. but I also think too many new coaches blindly do this as well. But for the sake of this article, I’m referring to SPENDING money on material items and experiences.

You’ll find yourself on a hamster wheel of high interest debt and it’s NOT worth it.

In the meantime, keep growing my friends.

Disclaimer: This blog shouldn’t be considered advice, or recommendations. If you have questions pertaining to your individual situation you should consult your financial advisor.

Justin Green, CFP®, MSPFP

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