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The "Forget about it" financial plan

Automation is the key to following through on a financial plan. If your financial plan executes without you having to do anything then you can forget about it and live your life. We call this the "forget about it" plan, which should only be said with a cheesy New York accent. Here are the steps:

1.) Make a budget

Start with your net income (what you take home after 401k contributions, HSA contributions, tax withholding, and other deductions)

Then put in all of your expenses. We like to look at credit card and bank statements to see what you actually spend vs what you think you spend.

2.) Include saving and investing in that budget

Notice how we budgeted for saving and investing! Instead of it being an after thought we chose to be intentional about this in our process.

3.) Automate transfers and investments

Set up automated transfers from your bank account into your investment accounts so that you can no longer spend that money. You can also set up automated investing too (we can show you in another article).

4.) Know how much is leftover

This is just subtracting your total expenses from your net income.

In Microsoft Excel: you can easily total your expenses by using the formula =sum(highlight cells with expenses).

5.) Adjust your credit limit to be that leftover

Lastly, if you are having trouble staying under your leftover number with discretionary spending. Call one of your credit card companies and have them change your credit limit to your leftover number. Spend as much as you want, but once you hit your credit limit your credit card will deny any future transactions!

Beware: this will make it more difficult to improve your credit score, because credit card companies want you to keep your balance less than 30% of your credit limit.


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