Goal Setting: Why Your Money Should Be Spent Before You Have It

Money spent before it is in! It seems like a very negative concept and the incorrect way to handle finances if you are looking at the surface. However, dive deeper with me and see why this is exactly opposite, why spending your incoming money whether that is profit or your fund is up and running with your investors sending money your way, and, finally, how the benefits of these conversations will make your goals more realistic and attainable.

The need to have a budget is never overstated and one that is probably quite obvious. This is needed when doing anything, Six Flags trip, gas money for work, child care, personal checkbook, and where we will spend some time; your business! If you are Real Estate Investor, this may mean the draw schedule for the flip you are doing or how you are to receive you interest only payments on money lent.

The focus of having a budget is normally spent on the money in your account. The argument being, “how do I pay bills, go to Six Flags, or pay for child care without the money in the account?” I want to challenge this concept. The goal will always be too far if your never plan the path to get there.

Spoiler Alert: I love goals! I love the idea of getting something done that was too big to tackle or too hard to climb! This is how I set goals. I want to push my own thoughts and conceptions on what is possible to attain. This one exercise has bolstered my goals and challenged how I set them, both personal and professional. All I do is tell someone! This can seem obvious, but the act of saying what your goals are to someone else creates instant accountability.

Now the rest of the story…

Some of the best advice I ever received regarding finances was, “know where all your money is going before you have it.” In essence, have all your money spent before you receive it. Ear mark every dollar for an intended purchase. With this advice, I set up a calendar for the sole purpose of tracking money coming in and how it was to be used on the way out. Starting with my monthly budget I used the 70/20/10 rule. 70% of what I brought in was used for living expenses and planned/future expenses (i.e. vacations, emergency appliance replacement, car issues, etc.), 20% used for savings, 10% was used for charitable giving. The ratio given here is a guideline, never intended for 100% compliance.

With this monthly money map (I love alliteration), the future month and the money are both planned out. I would add in a closing or a purchase of a fix and flip property when I knew a closing was scheduled.

With my style of goal setting, I throw a goal out there and work backwards. I put that goal on my monthly money map! The vision becomes clearer and the money is there as a result of the focus being there!

The great thing about goals is they can be adjusted. When the MMM (monthly money map), has too much money left, ADD A DEAL! When it doesn’t have enough, hand your deal off to another investor. There will always be another one!

Map that Money!

Happy Flipping!