Cash-flow planning month is almost at an end. And wow, did my calendar fill up fast! If you got a spot, it was great to see you! If you didn’t, just let me know. I’ll send you a link to my “secret” calendar — one that’s not available at fpfo.co/meet — where you can grab a 60-minute spot for us to dig deep into your cash-flow plans. 

If we met, we likely reviewed your spending from 2022 and set goals for 2023. If not — maybe meetings aren’t your thing or you’re not available during the same hours as I am — that’s ok. Here, I’ll go beyond the budgeting basics with three simple steps that you can use to set yourself up for successful spending and saving in 2023.

1. Review 2022.

You might be able to skip this step if we met during cash-flow February. Still, I encourage you to take a look at the next couple as a refresher.

If we didn’t get together this month, you can start your cash-flow planning with a retrospective. Look at all of your spending from the entirety of 2022. If pulling your bank statements, receipts, and credit card bills and then categorizing your expenses is too much, you can skip this step, too! But that means you ought to pay special attention to the next two.

Have those 2022 results handy? Plug ‘em into your copy of the FPFoCo Cash-Flow Planning Worksheet and make it your own. Change anything and everything you want, from how things are named to how they’re categorized and more. It’s all editable, and you can even work with it if you’re not an avid RightCapital user.

Now that you have your Worksheet filled out, take a guilt-free step back and look at your numbers. Where did your spending surprise you, in both positive and negative ways? Where would you have liked to have spent more — and less? What about the bottom line? Are you showing a surplus that didn’t make it into your savings? Do you show a deficit, meaning that you had to dig into savings to support your lifestyle?

Bring your thoughts and the answers to those questions into the next step.

2. Set goals for 2023.

Whether you have a full year of data to review or not, set some realistic goals for 2023. I’ll repeat myself here: Set some realistic goals for 2023. The sheet is set up for you to cruise the sections from top to bottom. And while you can hop around within each step, I suggest you approach it that way, starting with Step 1.

Why? The expenses that you have more control over changing are at the bottom, so plan to focus your goal-setting time there. 

Where did things shake out? Do you have a surplus that you can now use to bulk up your savings? Will that extra be your “slush” money for the things you inevitably forgot? Do you need to take another run through Step 5 to free up some expenses and turn your projected overspending into a breakeven or surplus?

Now go through one more time to see how you can better align your money with your values. Would you rather spend less at Amazon, Target, or Costco so you can increase your vacay spending? Plan to spend less on home goods so you can dine out more with friends this year?

With those goals set, it’s time to start accomplishing them.

3. Track your spending.

This is by far the most important step. And I mean that not only because it’ll give you the data you need to start fresh at step one next year. (Before you ask, yes, I suggest you do this every year!) It’s the most crucial step because it’s how you turn your cash-flow plan into cash-flow action. 

How? Ok, as much as I absolutely love spreadsheets, I’m not a “monitor all of my spending in a spreadsheet” kind of person. (If you are, kudos!) So I let technology do it for me in the form of a budget-tracking app. While I don’t advocate for using any app in particular, I personally use the free version of Mint. Other options I’ve heard of include YNAB, Rocket Money (formerly Truebill), Copilot Money, and Tiller. 

(Send me your favorites so I can check them out!)

Once you’ve decided on the one you’ll try (or try first), link your accounts. Next, plug in the goals that you set in your Cash-Flow Planning Worksheet. You’ll use them for your weekly check-ins to see how your spending is going. You certainly didn’t spend time setting goals for nothing! As you check in weekly, you’ll see how much of each category’s available spending you’ve used — and how much is left for the rest of the month.

I recommend weekly check-ins because I know how often many of you (and I) make purchases. If we’re not checking in weekly (myself included), it can be tough to reign in spending and stay on track. (Mint sends me weekly notifications to check in on my spending, which act as my helpful reminders.)

So spend 15 minutes a week reviewing your spending categories and recategorizing as necessary. Your app will likely learn from you and better categorize your purchases over time. Next, check in on your spending levels to see where you’re at. I keep mine simple with only eight categories, and everything else goes into the “Everything Else” bucket. There’s a lot of “other” sometimes, and that’s ok. It gives me a good idea of where I need to adjust my goals!

Here’s a quick breakdown of the categories in my Mint app so you can see just how simple it is:

Auto & Transport includes gas as well as auto insurance, registration, and maintenance.

Mobile Phone is my cell phone bill along with accessories (like replacing the glass screen protector I’m always cracking).

Television is for my Hulu subscription.

Financial holds my individual disability insurance premium.

Groceries tracks my legit grocery store purchases.

Restaurants gets everything else food-and-drink related, including dining out, takeout, bars, coffee shops, liquor store, and so on.

Sports is for my running and hockey equipment, race registrations, ice skating and ballet class fees, disc golf purchases, gym membership, Avalanche tickets — everything related to being active and enjoying sports of all kinds.

Mortgage & Rent is my rent payment and renters insurance.

My “bonus” category is Other spending, which catches any purchase subcategories that don’t fit nicely into the above. One example is “Shopping” for clothes and household items, which I tend not to do on a monthly basis. “Personal Care” also goes there since I don’t always have a set schedule for haircuts or self-care purchases. Another is “Gift.” Since they’re seasonal, gifts don’t get their own category on a monthly basis. 

This means that I always have to be mindful of these others and ensure I keep a budget surplus to cover them when these expenses do arise. Having my app track them throughout the year is absolutely crucial for my annual Cash-Flow Planning Worksheet refresher. Since I don’t actively track them, I can look back through my app and know what my total budget is for the coming year, whether I need to adjust it, and how much I need to keep in mind for these categories overall to stay on track.

Now when I tell you that budgeting doesn’t have to be difficult, I mean it. I hope you can see that here! 

Your weekly tracking can help you stay on track as you check in on where you’re at and how far you have to go. It breaks your big Cash-Flow Planning Worksheet into manageable chunks that move you closer to your goals.

Find yourself underspending or overspending on a weekly basis? That can lead to monthly over- or underspending. So if you notice a trend in your app, take it back to your Cash-Flow Planning Worksheet for a check-in. If you need to increase spending in one area, find another where you can decrease your outflows, then update your goals in your app accordingly. Have extra room to spend in a category? Redirect it to savings or to increase spending in another area that aligns with your values.