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# Create Your Own Dollar Plan: Step 5

Now that you’ve aligned your goals and your values it’s time to fit them in with the rest of your monthly budget. This piece is actually easier than you would think since you’ve put so much thought into the work you’ve done up to this point.

If you’re joining us in progress, here’s the work we’ve already covered in the previous steps:

Calculate the gap. Chances are pretty high right now that you’ll have a shortage. That’s ok because until now I’ve asked you to think in an ideal world. But in reality most of us do not have access to an unlimited pool of money.

Balance the budget. You knew this part was coming. It’s time to make your monthly obligations and your goals fit together. To close the gap you have three options:

• Cut money out of your monthly obligations. Compare each of your obligations to your goals. Does spending \$100 for the best cable package help achieve the goals you laid out? Would you rather go to basic cable and put the rest of the money towards your list of goals?
• Make more money. It’s often easier to make more money than cut expenditures.
• Cut money from your goals. Because you have already prioritized your goals, you know where to start: with the lowest priority. Determine if you can eliminate that goal entirely or scale it back some to cut down the monthly savings needed. See step 4 [4] for how to adjust the calculations if you make changes.

Reflection. I added one more reflection point because you may not be entirely happy with the way your goals were slashed to fit it into your current budget. That’s 100% ok, but now it’s up to you to do something about it.

My Example

We previously determined that in my example I needed \$4,022 in monthly savings to meet all four of my goals. Let’s say that I only have \$3,200 available in my budget. Here’s what I can do to adjust it:

1. Cut out \$400 from my budget. I determined that I could reduce my monthly spending by spending less money eating out [5], refinancing our house [6], and shopping around to save on insurance premiums. [7]
2. Make \$100 in extra income. Between signup offers [8] and adding some business income [9] I figure I can add bring in some more money since I know what the rewards will be.
3. That leaves \$322 that I have to cut out of the goals. I started at the bottom and eliminated the vacation home completely. I scaled the car back by \$148.

Here’s what the new chart would look like:

Goals Time Cost Priority Total Years Total Cost Monthly Savings
Early Retirement 1 9 9 19 20 \$1 million \$1,758
Build a new house 3 3 9 15 5 \$120,000 \$1,787
Buy a new car 9 1 3 13 7 \$13,750 \$155
Vacation Home 1 3 1 5 0 \$0 \$0
Total             \$3,700

We’re getting close! There’s only one more step. I’ll be back in two weeks to wrap it up.