One definition of dilution is “the action of making something weaker in force, content, or value.” In terms of financial planning, dilution can be spreading yourself so thin financially that you become weaker and unable to attain your financial goals. So how can we ensure that we do not become diluted in our finances? We make a plan that includes prioritized and measurable goals.
(1) Establish your financial goals. Stating these goals, in writing, is a necessary exercise if you want to make any lasting achievement toward them. So write them down. Consider eliminating consumer debts such as credit cards and vehicle loans, building emergency savings, giving abundantly, paying off mortgages, meeting the educational needs of your children, building a secure retirement and paying off your mortgage.
(2) Prioritize these goals. Which are most important to you? The definition of financial planning is allocating limited resources to unlimited needs and wants. Recognize that you most likely cannot buy everything you want, when you want it, and still achieve your long-term goals. So prioritizing and making tough choices between many desirable things becomes necessary. As Proverbs 21:20 instructs, “Be sensible and store up precious treasures – don’t waste them like a fool” (CEV).
(3) Make a measurable plan to achieve the goals you have prioritized. How much will you need to allocate toward the goal and for how long? Then build that goal into your monthly budget and create automatic drafts to allocate funds to the goal. This way, the most important things, as you have prioritized them, get achieved first. What is left is available to spend on living expenses. Luke 14:28 tells us, “But don’t begin until you count the cost. For who would begin construction of a building without first calculating the cost to see if there is enough money to finish it?”
(4) Track your progress. You cannot manage what you cannot measure. Measure your spending and know how much is going where each month. Spending can be tracked in detail, but at minimum, track every expense into one of five general uses of money: taxes, debts, giving, goals and living expenses. Print out the monthly account statements for every account or credit card that you spend out of; make a list with the headings of the five general uses of money, go down the account statement one item at a time, and categorize each expenditure. Total them to see how much is going to each category. Ask yourself if that matches your prioritized goals and then make changes to future spending as needed.
If you follow these steps, then your financial resources will not get diluted by overspending on living expenses and debts, which happens easily in a culture that tempts us to always buy the newest and greatest things. May God richly bless you as you strive to be a good steward of the resources He has entrusted to you.