I’ve always loved the general idea of telling money where it will go rather than wondering where it went. The last time I heard that said it made me think of parenting for whatever reason.
Just think about it. We tell our kids what to do or where to go and then expect them to obey. Their level of understanding and obedience determine the outcome of that instruction and we might have to correct their behavior. But money has no mind of it’s own. The outcome of our instruction to our money is dependent on our own level of understanding and obedience. So here’s a couple of general ideas that are both applicable to money and kids:
- Be Specific: When telling the kids what to do or where to go it can’t be general. It has to be specific. You don’t say, “clean up the house” or “go down the street”. You say, “clean up the floor in your room” or “go to Johnny’s house” (unless you’re just telling your kids to take a hike as in get lost before I break your little neck). The same is true with money. You can’t just say, “this money is for food expense and this money is for auto expense”. You have to say, “x amount is for groceries and x amount is for dining out” and “x amount is for gasoline and x amount is for insurance”.
- Make it EZ: When telling kids what to do it has to be easy for them to understand. You can’t use a phrase I’ve used before, “I at least want to be able to walk through your room for a change”. Otherwise they will push it all around until there is literally a small path. A better instruction is, “Everything on the floor needs to be picked up and put where it belongs so that the floor is clear of all toys & clothes”. With money there is a simple formula that is easy to follow. “Income – Outgo = Exactly Zero”. My friend Joe came up with the silly idea that the E from Exactly and the Z from Zero make budgeting “EZ”, but the general idea is true. When we use that formula to plan every dollar in to giving, saving, and spending categories it makes it so much easier to control where the money actually goes so we don’t have to wonder where it went.
Next time you find yourself wondering where the money went think of yourself like you think of your kids when they don’t follow the plan, and ask yourself the question, “Did I make a specific and EZ plan for the dollars I’m missing, and did I obey those instructions?”
. Although I don’t agree with how the media seems to be a little snide in their article about it, I do agree it is something that isn’t happening often and is worth getting special attention.