Most everyone has been taught that the way to control spending is to write out a budget (which determines a set amount that can be spent based on how much money comes in each paycheck) and then stick to that budget.

But most people hate to budget because budgets simply doesn’t work — and let’s face it, they aren’t any fun!  Budgeting doesn’t account for the fact that it’s virtually impossible to limit spending to ONLY the amount that comes home each month.  For that reason, budgets destine people for failure even before they get started on trying to keep one.

There’s a better way to control spending using the 3-pronged approach. 
Just as a three-legged stool needs all of its legs to stand, a good spending system that will actually help you get in control requires three crucial elements, all of which must be present and working at the same time to be effective:

Prong 1: Spending Plan.  First, plan (or forecast) how you want and need to spend money within prescribed categories; you determine these spending categories based on how you have spent money in the past.

Prong 2:  Tracking.   Second, track how you actually spend your money within these categories.

Prong 3: Compare.   Third, compare tracked spending monthly with your original plan to see what’s actually left over based on your income, then adjust spending priorities for the next month so that you can balance your income with your spending and still have the things you want without spending more than you have.

Using this three-pronged tracking approach allows the following:

• Lets you “prove your priorities” to yourself as your needs and wants change.
• Helps you remain in control when unforeseen problems occur, or when you want to spend on impulse.
• Best of all, it allows you to spend while still watching your bank account grow.

Different from Budgeting.  This spending approach is much different than traditional “budgeting” methods because it doesn’t force you to focus on what you can’t have. Instead, making a spending plan, tracking your spending according to that plan, and then comparing that spending monthly with available income gives you all the following benefits:

• Lets you feel free to spend in the areas of your life to which you have given the highest priority.
• Helps you track how your spending will affect your daily needs, emotional wants, and long-term security
• Rather than showing you what you have done after the fact, when it may be too late (as budgeting does), a plan and tracking that plan lets you know what you have left to spend after each expenditure.

Budgets are static and don’t account for life “coming at you” and for the need to be flexible in the way that you spend.  But planning and tracking allow you to alter your spending as needed and make different choices going forward so you can remain in control while still giving you the freedom to spend money in areas that you deem important.

A budget dictates what areas to cut, but tracking indicates the most meaningful areas for you and your family in which you want to spend.  Budgets are depressing and difficult to force oneself to do, but planning, tracking, and comparing are fun and encouraging when they are done with specific goals and dreams for now and the future in mind.