The kickoff happened when you got your first paycheck
The game ends when you score a retirement touchdown
How's your game going so far?
Making good yardage? Your retirement touchdown a slam dunk?
Need a time out to work on your game plan?
OK, let's do it
First, how this lifelong game is played successfully
As you receive
You manage that
income by ...
paying bills and
paying off debt
managing credit cards and
paying off high balances
and setting aside long
and short term savings
so that you will win
your dreams like ...
securely raising and
educating your kids
and enjoying an awesome
retirement (Score! You rock!)
Winning your money game means
choosing the management method
and tool that works best for you
The ones that will get you
to your retirement touchdown
The stronger your method and tool,
the better the odds that you will
score your retirement touchdown!
Living paycheck to paycheck
This is not a method. It's the default money game right out
of high school. You're not even in the stadium parking
lot. You're out in the street tossing a ball around with
the others in the neighborhood who are also living payday
This is the way people play the game
when they have not bothered to choose or take advantage of one
of the available tools. They either like this lifestyle or
have not yet learned that there is a better way.
The only way to win with this game plan is to either have
so much income that you couldn't spend it all even if you
tried, or to clamp down on your lifestyle so hard that you can make
some yardage just by continuously looking for ways to
live frugally. You live for the thrill of finding yet another cost shortcut.
The odds of you scoring a retirement touchdown with this
lifestyle are very limited.
Tracking expenses, or keeping a spending history, involves the
recording of every penny you spend. The intent is to use your
spending history as a basis for identifying spending habits that
can be improved in the future.
The main weakness of keeping a spending history
is that it is focused on past activity. This technique is of little
help when you are trying to make immediate decisions about current
and future spending.
When you are tracking your expenses you are watching continuous
instant re-runs of your game. Whether or not you are making any yardage toward
you retirement touchdown is hard to see. You are trying to make
it downfield while always running backwards. You are easily tripped
up by unforeseen large expenses.
The odds of you scoring a retirement touchdown after a lifetime
of tracking expenses are better than doing nothing. Barely.
Budgeting involves setting what percent or amount of income expected
in the coming month is going to be spent on which categories of expenses.
As money is spent during the month, purchases are recorded by category
in order to track how well spending is staying within the predefined
Traditional budgets tend to fail because the setting of rigid spending
limits does not lend itself well to being flexible. When unforeseen
expenses pop up or spontaneous spending happens, a budget can be
rendered useless very quickly.
The budgeting process sounds like it "should" be very easy. However,
it is difficult to stick with a budget for very long. The energy and
dedication needed to create a new budget every month and to keep track
of where every penny is spent is tremendous.
The chances that you will stick with budgeting long enough to make your
retirement touchdown are not good. Continuously planning the next month
while keeping track of spending in the current month is like trying to
call the next play while constantly watching instant replays. You can
be easily blindsided by an expensive blitze.
Maintaining a spreadsheet
For those skilled with Excel or another spreadsheet application, setting
up a spreadsheet to forecast income against bills is attractive. There are
problems with this method of managing your day-to-day financial game plan.
A spreadsheet must be manually maintained to keep it current with the
advancing calendar. When you remember to do an update, keeping your manual
playbook current is cumbersome, time consuming (like making a monthly
budget) and prone to human error.
The normal manual spreadsheet is used only to calculate the impact of
bills on income. Keeping track of income vs bills is planning only
two of the six success factors of your money game. Such an incomplete
picture of your playbook can make it hard for decision making if not
Penalty flags from one bad spreadsheet
entry can result in a lot of lost yardage.
Organizing your paydays
A minimal requirement for getting a handle on your day-to-day finances
is to continually match your expected bills and expenses to your
expected paychecks. While relying on paydays as a basis for planning is not the optimal
game plan, seeing a coordinated picture of the income and outgo that
flows through your checking account is a good place to start.
Employing a "do as you go" approach to managing household finances,
Payday Organizer has the advantage of requiring no setup. When you first
start the program, you begin to enter current information with minimal
requirements such as a date for upcoming paydays and a name for each bill.
The flip side of this quick startup and simple ongoing
maintenance is the forfeiture of any automatic forecasting of your finances. In
other words, your next play may be obvious, but, your game plan for the next
first down may not be.
Using Payday Organizer is a good place to start when first learning how
to manage your game plan. However, staying with this simplistic program
will not make getting your retirement touchdown as easy as it could be.
For the optimum game stategy, your best yardage maker is Income Companion.
Something to consider is that anything you do in Payday Organizer cannot be
carried forward to Income Companion. When you are ready for the major
leagues, you will walk on the field in a new uniform with an entirely new
Projecting a complete picture
Income Companion is essentially a very intelligent spreadsheet. You
use the program to manage the cash that flows through one checking account
which is referred to as your hub account.
Income Companion performs all of the complex processes needed to continuously project and
summarize all of your everyday finances. The program creates and displays, on one
screen, a dynamic and easy to understand financial game plan.
After you do a one-time setup of your income, spending money, bills,
credit cards, special focus (expensive) items and saving plans, Income Companion
automatically projects your finances for up to 12 months. Twice
monthly columns give you a clear play-by-play bottom line for now as well as the coming months.
You have a clear indication as to whether the financial plays you have called in will succeed.
Once you get started with Income Companion, the program will do the grunt
work of keeping your playbook current. You become the coach on the sidelines
keeping an eye on how well your financial game plan is progressing. When needed, you call in new changes
to the play-by-play plan to keep your march toward your retirement touchdown
on a path that is straight down the middle.
Those are your options. Pick one
and get back in the game!
When you are ready to own, not just
play the game, read the rule ebook
Understand both the rules as
well as the nuances of how your
everyday financial game is played
Know why income is more
than just a paycheck
Know why spending money is
the key to winning the game
Clear the confusion about how
bills and debt work
Use credit cards to your
advantage without extra cost
Know how you plan to pay for
expected, expensive items
Have a complete understanding of
the myriad options for saving plans