Spending Plans

Tracking Your Spending

The first step in making a spending plan is to keep track of your spending. Easy options to track spending are: saving your receipts and then adding them up, or writing every purchase down in a small notebook and then adding those up. The best way to gain an accurate look at your spending is to track “every” purchase (i.e. fast food, coffee, haircut, dry cleaning, etc.) for a month. Tracking your spending allows you to see first-hand what your spending habits are and more importantly, where your money is going. Remember, small purchases can add up fast so try and Plug Spending Leaks!


$1.50/day x 7 days = $10.50 (not bad)

$10.50/week x 4 weeks = $42 (OK)

$42/month x 12 months = $504

Think about what else you could do with $500!

Creating a Spending Plan (a.k.a. Budget)

There are many ways to develop a spending plan including paper and pencil, budget template or a computer program. Practice Managing Your Money and use the Personal Monthly Budget Spreadsheet. For a spending plan to be effective, it needs to include all of the following:

  • Pay yourself first. Plan to save at least 10 percent of your income out of every paycheck. Have it directly deposited into a savings account.
  • Make a list of all your expenses.
    • Fixed expenses: occur every month and are essential for daily living, usually represent needs versus wants.
    • Flexible expenses: vary each month, usually represent wants versus needs.
    • Occasional expenses: occur a few times per year and are often overlooked in monthly planning. Examples could include: auto insurance or repairs, school supplies, holidays, etc.
    • Don’t forget the value of having an emergency fund. Start saving today!
  • Add up your monthly income from all sources. This includes jobs, unemployment, government assistance, child support, alimony, etc.
  • Balance your budget. Saving + total expenses = income. If this is not true:

    • Increase your income.
    • Decrease your expenses/spending.
    • Consider a combination of both.

Managing a Spending Plan

Review your budget on a weekly basis. Adjust your budget weekly. At the end of the month, review your progress and plan a budget for the next month.

Track your monthly expenses against your monthly budget. If you have expenses you did not anticipate, adjust categories to reflect the change. If emergencies occur, dip into your emergency savings account to avoid the cycle of debt, but plan to replenish the account as soon as you can.

Understand that budgets change. Budgets must be adjusted from month to month. Planning for change is important!

Remember that it takes practice and planning to stay on track with your finances. Plan to use the same budget format for one year, this will provide you with history and positive results.

Set your financial goals. The first step to successful money management is to have financial goals. Goals can be short-term (less than six months); medium-term (between six and 12 months) and long-term (a year or more) in length. Financial goals tables can help you get organized.

Homeownership and Your Spending Plan

It is important to be aware of your financial situation when deciding to purchase a home. If you have not already created a spending plan (a.k.a. budget), now is the time!

One of the biggest barriers to creating a spending plan is the myth that they are restrictive. But really, the opposite is true! A spending plan allows you to be in control of your financial future, choose in advance how much money will be spent, and how to save your money to reach goals. Money management is the key to successful homeownership.

  • Tip: It’s recommended that you save 1 - 3% of the value of the home per year for maintenance and repairs. For example: a house valued at $100,000 would require saving $3,000 a year (three percent), which equals out to $250 per month.

Additional Resources