7Keys to a Financial Plan That Works By David Kimball
This article is about you ta- king back control of your mon- ey—and not just your money. It’s about doing what it takes
to enjoy a life with your family. I have
learned that money is not a fun topic for
most people, because most people do not
realize that you have to understand it.
If you are negative about money, or are
consumed by a desire for it, you are likely
never going to have a lot of it. It does not
matter if you make $20,000 per year or
$100,000. The principle still applies.
Do you know why budgeting does not
work? Most budgets fail because individuals and families don’t make them personal. With budgeting, I take a sheet of
paper and list my income at the top, and
then I start listing the commitments and
needs I have: car payment, house payment, utilities, groceries, etc. Have you
ever done that?
That is what a budget is—but it is only
20% of a full-fledged financial plan. A
budget is a personal finance plan, and
you have to make it personal. If you do
not make it personal, it will never work.
1. The first key to a financial plan that
works is to stop going in to more debt.
If you are in debt and trying to get out,
you must stop paying with credit cards.
Have you ever financed a pizza with a
credit card? If you carry a balance on
your card, that pizza is being paid on
You have to make
budgeting personal, and
it needs to be in writing.
installments with interest tacked on
2. The second key is to be a giver.
When someone has a need, I want to be
able to help him. It could involve assistance with time, stuff, or money. Whatever it might be, having the options
available to bless someone else is a great
position to be in. Have you not seen or
helped others who were in some pretty
desperate situations? It always makes me
more grateful for what I do have.
When I become a giver, I can be re-
minded that my situation is not as bad as
I thought it was. However, if I owe others,
if my wages are being garnished, or if
I have no savings for when the engine
blows up, how am I in a position to help
and bless others?
3. The third key is to learn to live on less
than you earn.
If your income is $3,000, and you spend
$3000.05, you had better have found
that nickel in the sofa. Otherwise,
spending more than you make does
not work. You have to spend $3,000 (or
ideally, less), and then you have to be
able to save, you have to be able to invest, you have to be able to give, and
any number of those things. You have
to live on less than you make.
And it does not matter what your income is. It could be $1,000 or $3,000 or
$5,000 or even $10,000 per month. The
principle is still the same.
Now, if you put your expenses on paper
and it is not working, there are only two
things that you can do: raise your income
or lower your expenses. If you want to do
it in thirty-six months or less, which is
what I teach and walk people through, do
both of them at the same time.
4. The fourth key to a financial plan that
works is to have a plan, and it has to be
written on paper.
When a budget is created, after subtracting expenses from your income,
you may get to the bottom of the barrel