Winning With Money Part 2: Get Proactive with Your Money

Be proactive with money through a budget or spending plan

17 Aug Winning With Money Part 2: Get Proactive with Your Money


This is part two of a 5-part series on how to start winning with money. These 5 posts will become part of an e-book I’m writing but I wanted to make the info available ahead of time. Partially because I needed something to blog about,but mostly to share the stuff with you,our readers,so you didn’t have to wait.

Be proactive with money through a budget or spending plan

Step 2: Start Being Proactive!

 “I skate to where the puck is going to be, not where it has been.” – Wayne Gretzky.

Many of us handle our money by thinking in the present tense. We look at the bills we have today and the money we have in the bank today, then try to make decisions based on the current situation. The problem is, we make decisions in the now, but forget to think about the future: where the puck will be.

If you want to start winning with money you need to be more proactive with your resources. Stop living in the now and start making decisions for your future. You can’t spend all of your paycheck today when you’ve got a mortgage payment due five days from now before your next paycheck comes in.

You’ve got to start thinking about the opportunity cost of your spending decisions. If you spend a dollar today, you’re giving up the opportunity for that dollar to earn you interest down the road. If you choose to save money today, you lose the opportunity to spend it on something you may want. Everything has an opportunity cost, and they’re hard to recognize because the lost opportunity may be far in the future.

Be aware of these hidden costs with every financial decision you make. If you’re constantly thinking in terms of how much each decision is costing you, you’ll begin to make better decisions on a daily basis.

Ok, so you know that everything has an opportunity cost. Now what?

Armed with the mentality that every decision costs you something, you can now make more rational, informed decisions for your future. That new focus gives you the foundation you need to be proactive with your money.

The best way to be proactive with your money is to have a written plan. You need a long-term plan with goals and a strategy to reach those goals. This should be reviewed at least once a year to measure your progress toward those goals and make changes to the plan as needed.

You also need a short term cash flow plan. This is your budget. The cash budget should be done monthly based on the specific income and expenses for that month. It’s as simple as writing down your income for the upcoming month and writing down where you plan to spend or invest every dollar of that income.

Finally, you can’t just write a plan and expect it to happen. You actually have to follow the plan. Set up some metrics to measure your progress and make sure you track the progress regularly. It’s imperative to check your progress on the monthly budget during the month, not after the month is over. It’s counter-productive to wait until after the month is over and wonder why your wallet doesn’t reflect your plan.

It’s also important to track progress on your long-term goals. Every three months or so, take some time to review your net worth. Net worth is a great scorecard for tracking your debt reduction and wealth building efforts. The same holds true for investing. Take a look at your portfolio every three months or so to make sure you understand where you are and re-evaluate where you want to go in the future.

13 Comments
  • krantcents
    Posted at 14:20h, 17 August

    Money is no different than any other goal you may have. Setting goals, having a plan to accomplish the goals and monitoring your progress is essential.

    • Matt Wegner
      Posted at 14:39h, 17 August

      Great point. You can apply that logic to almost every area of your life.

  • Doctor Stock
    Posted at 19:58h, 17 August

    Good post… There’s one point in particular I like… it’s the 3 month evaluation. While a monthly and an annual evaluation are beneficial, the three month evaluation is a great check point for long-term goals. Also, I like the idea of checking your budget part way through the month, not just at the end when it’s too late to make adjustments.

    • Matt Wegner
      Posted at 20:10h, 17 August

      Thanks for the feedback!

  • shanendoah@Baking the Budget
    Posted at 17:51h, 18 August

    I’m a little obsessive when it comes to the tracking and reviewing. For almost 8 years I’ve been tracking every single bit of our spending and doing quarterly and year end reviews. For a long time, though, I did nothing with that information. However, when we finally did sit down and say- what are our goals, where are we spending our money, where can we cut back, etc., I had all the information at my finger tips.
    I have always said that before you can make a plan or a budget, you need two things- to know where you’re spending your money and what your goals are.

    • Matt Wegner
      Posted at 20:28h, 18 August

      You’re absolutely right. All the information in the world is useless if you don’t do something with the information!

  • Funancials
    Posted at 19:26h, 18 August

    After studying economics in college, I spend all my time weighing “opportunity costs.” I think economics should replace handwriting in schools…Nice post

    • Matt Wegner
      Posted at 20:31h, 18 August

      funny – I didn’t really consider the opportunity costs until recently, and even more so since I took an econ class. It’s definitely part of my decision making process these days.

  • Best of Money Carnival #117 | Pastor Personal Finance
    Posted at 06:14h, 22 August

    […]  In Winning With Money Part 2: Get Proactive with Your Money, Matt from Financial Excellence explains why you need to have a long-term approach to your money […]

  • Festival of Frugality #294 Blog Carnival | Budgeting In the Fun Stuff
    Posted at 05:02h, 23 August

    […] presents Winning With Money Part 2: Get Proactive with Your Money posted at Living In Financial […]

  • Best of Money Carnival #117
    Posted at 04:44h, 30 August

    […]  In Winning With Money part 2: Get Proactive with Your Money, Matt from Financial Excellence […]

  • 5 Proactive Money Sites | Money Market
    Posted at 15:32h, 21 October

    […] Winning With Money Part 2: Get Proactive with Your MoneyAug 17, 2011 Many of us handle our money by thinking in the present tense. We look at the bills we have today and […]

  • Best of Money Carnival #117 - Money Wise Pastor
    Posted at 22:27h, 09 November

    […]  In Winning With Money Part 2: Get Proactive with Your Money, Matt from Financial Excellence explains why you need to have a long-term approach to your money […]