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A Savvy Money Plan for Financial Freedom


By Karen Neorr

Owner and Money Coach, The Savvy Finance Coach

The first thing I hear when I mention budgeting to most people is a groan or a disheartened sigh. To my nerdy dismay, most people find budgeting boring, confusing, or too complicated. Although they might think it could possibly be useful, it’s usually something at the bottom of their priority list. But shouldn’t financial health be at the top of the list? Believe me when I tell you this – if you are struggling financially, make budgeting a priority, and you might change your life. I truly believe that if you can master this process, you are well on your way to financial freedom.

What is a Budget or Money Plan?

Simply put, a budget is a plan for your money. Since many people shy away from the word “budget,” I prefer to use the term “Money Plan.” A money plan consists of estimating income and spending over a set period of time. Budgeting doesn’t need to be complicated or scary; it can be as simple or as complex as you want it to be. For example, it can be as straightforward as saying, “I’m going to bring home approximately $4,000 this month and not spend more than that.” If your money plan is as simple as this, all you need to do at the end of the month is: 1) add up all your income; 2) add up all your spending; and 3) subtract spending from income. The result can be powerful and what you learn from the process can be enlightening, even from such a simple example. Many people who don’t budget or don’t have a plan are shocked when they actually run the numbers. So here’s my first bit of advice: if you feel like you are struggling with money, take the following steps: 1) review your bank and/or credit card statements from the past 3 months; 2) identify income and spending trends, categories, and any surprising revelations; and 3) identify areas for improvement.

Notebook and Fountain Pen

Financial Awareness is Crucial

You might discover, using the simple exercise above, one of many surprising results. You may find you are spending more than you make – you are in the red. That is a huge red flag, warning you that if you don’t make some changes, your risk of long-term financial insecurity and indebtedness is increasing – the opposite of financial freedom. Even if you aren’t spending in the red, you might be surprised to realize how much you spend frivolously. Many of my clients are shocked at how much they spend a month on eating out, coffee shops, clothing, gifts for others, or other non-essential expenses. Alternatively, you might discover that spending isn’t your problem, but the income part of the equation is the problem. Whatever you discover, it is usually incredibly enlightening.

The Budget, Simplified

Now that you’ve identified some areas for improvement, I’ll share with you the two things that I’ve learned over my years as a money coach. There are three distinct ways in which people spend money, and of those spending types, it’s the variability and unexpected expenses that typically derail our budgeting efforts. The three spending categories explained:​

  1. Fixed, Recurring, Predictable Expenses: Expenses that occur regularly (typically monthly) with little variability in amount. Examples include rent/mortgage, phone bill, or Netflix bill. These are rarely the expenses that bust our budgets because they are expected and reliable.

  2. Frequent, Variable Spending: Expenses where we swipe our cards dozens of times throughout the month. The amount we spend each swipe can fluctuate dramatically, but the amount we spend over the month is somewhat predictable. Tracking these expenses over the month is onerous due to the sheer number of transactions. Examples include food (groceries, coffee shops, eating out, snacks), clothing, gas, kid’s expenses, online shopping, miscellaneous spending, and entertainment. These expenses can derail our financial plan due to the ease with which we spend –the behavior is so habitual that it doesn’t even register as a financial transaction.

  3. Infrequent, Variable Spending: Expenses that occur on an annual, semi-annual, or unpredictable basis and are typically a relatively large amount. Examples include insurance premiums, vehicle expenses (registration, repairs/maintenance, tires, replacement), gifts/holidays, vacations, and emergencies. These expenses catch us off guard and are the most common budget busters. We think we are doing just fine, but then – surprise – we get in a fender bender, it’s the holiday season, or we need to replace our water heater.

Understanding the ways in which we spend – and where the trouble spots are – has led me to develop recommendations to alleviate these issues. The resulting budgeting process is easier, less time-consuming, and gets results.


Here’s what I recommend in relation to the three ways we spend:


  1. Automate, Automate, Automate: Automation has been shown to be successful in helping people achieve their financial goals. It will save you time and effort. For your fixed bills, use Auto Pay or automatic recurring bill payment through your bank.

  2. For Frequent Spending: The most successful method to curb overspending is to use the envelope method, which forces you to have awareness about spending. The envelope method works like this: decide the amount of money you want to spend in a particular category per month (food, for example), withdraw that amount of money from your primary checking account, and put it into an envelope. Once the envelope is empty, you can’t spend any more from that category until the next month. There are various ways you can implement the envelope method, as opposed to cash. Personally, I have two additional checking accounts that I consider my monthly spending “envelopes” with monthly automatic transfers for 1) food and 2) miscellaneous spending. I have debit cards that I use when I spend in those categories and overdraft protection is turned off. Other electronic “envelope” options could include reloadable gift cards or the Qube Money app (Google reviews HERE). I do not have personal experience with Qube Money, but I find the concept intriguing.

  3. Use “Savings Buckets” for Infrequent Expenses (also referred to as sinking funds): A “bucket” is separate from your primary checking account. Identify all the infrequent, large expenses that you have throughout the year (or even longer term). Examples include property taxes, insurance premiums, vehicle expenses, home maintenance, vacation, annual subscriptions, gifts/holidays, charity, and emergencies. Determine an annual amount you need for each of these categories and then further break that down into a monthly amount. Set up an automatic monthly transfer from your primary checking account into each “bucket”. At a minimum, you should have at least two buckets: one for your emergency fund and one for everything else. I find it beneficial to have more than two buckets so that I can know at a glance how “full” that bucket is. Personally, I have seven separate savings buckets: 1) emergency fund, 2) vehicle expenses, 3) vacation fund, 4) holidays, 5) kids activities, 6) house maintenance, and 7) taxes & subscriptions.


If you can automate expenses, establish and be accountable for fixed monthly spending “envelopes”, and create fixed, monthly savings amounts, you can create a sustainable money plan and have peace of mind knowing that you have a strong financial foundation.

Financial Report

Put Your Plan into Action

When implementing the monthly Money Plan, tracking your results is crucial. Before the beginning of each month, create your plan by identifying your fixed expenses, spending envelope allowance, and savings bucket goals, making sure these do not exceed your estimated monthly take-home pay. As the month progresses, check your bank account and monitor transactions weekly to ensure everything is going according to the plan. This is especially important when you are a beginner. In time, monthly reconciliation and budget checkup will be quick and perfunctory. It takes me less than 15 minutes per month to make sure my Money Plan is running smoothly.

Expensive or onerous budgeting software or tools are unnecessary to implement this process. Because this process is largely automated, all that is needed is a pen and paper or a simple computer spreadsheet to compare the estimates to actual expenditures. I prefer the spreadsheet because it’s simple, fully customizable, and I will not lose my information when technology or programs change. If you are more computer-savvy, a simple online search will provide you with plenty of reviews and options of online budgeting applications to choose from. Most banks offer budgeting tools or software for their customers. 

Budgeting: A Personal Choice

There are plenty of financially successful people who do not keep a budget. How do they do it? They must be rolling in the dough… Not necessarily true. There are many tools that help people get ahead financially, other than keeping a budget. But a financially savvy person will have some kind of plan in place to ensure their financial success. They might use cash for their expenses, they may be implementing automatic savings and retirement programs, and they may make personal choices to avoid debt. Each of those techniques is proven strategies to get ahead. Personally, I have found that the Money Plan has been the most important and powerful tool in my financial freedom journey. I use my Money Plan to make very strategic financial decisions that have empowered me to live my life on purpose.

The Takeaway...

If you feel like you are struggling financially and not sure why, I highly recommend that you try some of these strategies. This is simply the easiest, cheapest, and quickest way to definitively find the root cause of that struggle. I feel certain that if you track and monitor your spending for at least 30 days, you will be enlightened. If you are surprised by the results and feel motivated to make a change, create the Money Plan. Implement the plan for 3 months, and you will begin to develop some life-changing habits that will get you on the path towards financial success. I have no doubt that you can do it.


My last words of advice, if you are struggling to implement the Money Plan or determine what changes you can apply to make a positive impact, contact us at The Savvy Finance Coach. As a Money Coach, I help my clients be confident and comfortable with money to achieve financial freedom. If you have financial freedom – you can live your life on purpose.

Stacks of Coins
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