Last Updated on February 5, 2024

It’s a horrible feeling. You spend most of your month working, the paycheck comes in and then the money disappears.

Where did it go?

Am I spending it correctly?

Why do I feel anxious when I spend money?

I’m sure I could be doing things better!

You would love to feel more in control. But you’re at a loss as to where to start. The banking system is archaic, it’s all in Hebrew. You have too many accounts and credit cards, in multiple currencies. It seems like an impossible task.

The good news is you’re in good company. Nobody gets taught how to manage money. A lucky few manage to work it out. A few others stumble along and get lucky. But most just feel lost.

This step-by-step guide will give you a framework for managing your money in Israel. After reading it, you’ll feel more in control and better able to make conscious decisions about how to spend, save or invest.

Step 1 – Write down your current income and expenses

This is where most people get stuck. It’s hard to know how to categorize and structure your budget. How much detail do I need? What if I forget something? Which categories are monthly and which are annual? Introducing…

The Blue & White Finance Spending Plan Worksheet

We’ve slowly honed this worksheet through our work with hundreds of clients.

Enter your email address below and we’ll send you our Spending Plan Worksheet.

Numbers Time

Sit down for an hour, together with your partner where relevant, and start filling out the income and expenses categories. Enter amounts based on your current or recent spending and income, not what you want it to be in the future (we’ll get to that soon).

1. Start with the easy ones that you know: rent, net salary, gan, arnona etc. Then enter the fixed amounts that you can look up easily: kupat cholim, internet, subscriptions etc. (these are all highlighted in gray).
2. Next, take a guess at everything else (highlighted in blue).
3. Finally, get out a few computers and phones and open up all of your bank and credit card statements for the past 3 months. Start scanning through the transactions and see if they fit into the totals you entered in the spreadsheet. Did you forget something? Did you overestimate or underestimate a category? Adjust.

Congratulations, you now have a good sense of your monthly cashflow!

Step 2 – Analyze and consider your goals

Your spending mirror will show whether you are saving money, breakeven, or losing money each month (on average).

If the result is as hoped, great! You may want to make some minor tweaks when creating your spending plan in the next step, but you don’t have much more work to do.

However, if your savings rate is low, you may not be able to achieve your life goals. What kind of goals are worth thinking about? Here are some examples:

• Buy a home
• Replace your car every X years
• Pay off debt
• Save for bar/bat mitzvahs and weddings
• Give money to your children
• Retire early

If you find that your savings rate needs to improve we’ll attempt to do this in our spending plan.

Step 3 – Build your spending plan

Yalla. Let’s build a spending plan for the next 12 months.

Click on the arrow on the “Spending Mirror” tab at the bottom of your Google Sheet and select “Duplicate”. Rename the new sheet to “<current year> Spending Plan”.

Now we change numbers. There are only two ways to make your budget balance or increase your savings rate: increase income or decrease expenses.

Here are some important considerations:

1. This process can be difficult emotionally, especially when money is tight. Remember that by sacrificing in some areas, you are being kind to your future self who won’t have to suffer under the strain of debt and bad decisions. Always keep your goals in mind. But also remember to be kind to your present self. Don’t remove everything that makes you happy.
2. Removing something you have traditionally spent money on is not a failing. It’s a statement that you are in control of your spending and that you have more important priorities.
3. You can save money either by removing a few large expenses or by wiping a small amount off many categories.
4. Every shekel you invest today could be worth 10 shekels (10x) in 30 years’ time and 120 shekels (120x) in 60 years’ time.
5. If you can’t quite get to a balanced state right now, build the best REALISTIC budget you can and keep to that for 3 months. Then re-examine and see if there are other areas you can reduce expenses or if you can think of ways to increase income.
6. Many of your dreams are attainable. Believe in yourself.

You can check out our free automated budgeting tool, the Oleh Budgeting Calculator for inspiration and benchmarks.

You now have your first spending plan!

Step 4 – Keep track

There are two main ways to track your budget:

1. High level – bank balance tracking
2. Detailed tracking – using a budget app (or manual spreadsheet)

If you would like to learn how to implement bank balance tracking or set up and use our recommended budgeting app, Finanda, consider signing up for our “Master Your Spending” online course. Packed with video walkthroughs, guidance, and tips, the course will help you gain confidence, change your behavior and track your progress. If you mention to us on Whatsapp that you reached this point in the article, we’ll give you 30% off.

Bonus – Next Steps

1. Review your spending plan once or twice a year. Does it need to be updated? Make updates in the Excel file and then copy the updates to your budgeting app.
2. If you would like help defining your goals and creating a financial plan that goes beyond your monthly budget, you can read more about our Financial Planning Program.
3. Don’t use tashlumim for day-to-day expenses. They only make sense for products like insurance that are consumed over time.
4. If you have debt, make sure have a manageable monthly repayment plan that has been included in your budget. If your interest rates are high or your monthly payments are too high or too low, considering refinancing the debt. Get an overview of your debts by making a list of each one, including the following parameters:
   • Lender name
   • The remaining balance
   • Your interest rate
   • The number of payment months left
   • Monthly repayment amount

FAQ

How can I create a spending plan?

Download our Spending Plan Worksheet and follow the instructions in this article.

Can you share some benchmarks on what a good spending plan looks like?

Sure! Download our automated Oleh Budgeting Calculator which will generate benchmarks for your personal situation.

Do you provide one-on-one support?

Yes, check out our Financial Planning Program.

I feel like I’m already very frugal, but I’m still struggling to make ends meet. What can I do?

It is very possible that you have already done great work on the expenses side of the equation. Sometimes the only option left is to make more income. That could involve increasing hours, changing careers, starting a side hustle, or getting a promotion.

I’m trying to save money for short terms goals over the next 3-5 years. Where should I keep this money?

A Keren Kaspit or a Pikadon (bank savings account) are good options to consider. You can learn more in our free guide here.