This is a post by NY Money Coach, Carrie Birgbauer. Carrie is a member of Moven’s Financial Wellness Community.

There are three levels of spending plans: Bare Bones, Middle of the Road, and Lifestyle of Your Dreams. People who are in the “money fog” scrape by, live paycheck to paycheck and at the end of every month, they wonder where their money went. Men and women with this kind of relationship to money often use credit cards to cover some of their expenses because they think there is no other option. The danger of using credit cards to supplement your income is while purchasing something can provide instant gratification, the magical thinking does wear off when the bills are due or the creditors start calling. Regret, remorse and even shame can surface possibly causing to the cycle to start all over again. People in this phase sometimes do not even realize that peace of mind around money is possible.

1. Bare Bones

When these men and women begin the healing process of financial recovery, they usually need to start with a Bare Bones plan which entails taking a hard look at the income situation and making sure all of their basic needs are met, i.e. food, shelter, clothing, bills, and safety. It can feel a little shaky at first to connect to the reality of your personal finances, but clearing the “money fog” also provides a sense of relief. The only way out of credit card debt is to stop digging the hole altogether. The first step towards stabilizing debt is to take an honest snapshot of it. Write down every current balance, interest rate, minimum payment amount, and due date. From there, you can target which credit card to pay off first by creating a conscious plan.

2. Middle of the Road

People who have a functional system for tracking and planning their finances also usually analyze their income and spending choices on a regular basis and maintain a current checking account balance offline. These folks are living in the Middle of the Road. There is stability, consistency and accountability. Fear, scarcity and worry have been replaced with financial and emotional security. Middle of the Road spending plans address the whole financial picture including the past, present and future. Any debt is being strategically paid off and areas of deprivation are being dealt with in a sustainable manner. Basic needs are fulfilled, non-monthly expenses are diagrammed, and meaningful savings have been maintained. From there, some wants (entertaining wish list items) can be sprinkled in one month at a time. One of the main benefits of having a healthy relationship to money is the opportunity to be creative. For example, if you spend $100 less on meals out for two months in a row, voila there is the $200 you wanted for a new pair of boots! The art and craft of “moving money around” can be very liberating and empowering and is optional within a Middle of the Road plan. Now, your money is working for you.

3. Lifestyle of Your Dreams

As an eternal optimist and visionary, I am always thinking about and planning for the Lifestyle of my Dreams. What if your income doubled, tripled or even quadrupled? What would it take to get there and what would become possible? This is one of my favorite conversations to have with my clients because I believe the very moment we state our true desires, the universe conspires for our success. To start, the Lifestyle of My Dreams would include inordinate amounts of travel, designing a house from scratch, driving a Vespa, having a personal chef specializing in healthy and organic food, obtaining graduate degrees in pediatric medicine, photography, counseling psychology, creative writing and art history.
I could keep going, but I am even more curious about your relationship to money and what the Lifestyle of Your Dreams looks like.

Image source: iVillage.com