Channels
Financial Planning
Money Management
Credit and Debt
Consumer Issues
Life Events

Use our online interactive calculators to help manage your finances.

more
 
Email a Friend

How to Prepare a Spending Plan


A spending plan, or budget, is your first step in building financial responsibility. A spending plan organizes your estimates of income and expenses over a set period of time-normally a month.

A spending plan can help you:

  • Stay out of debt
  • Identify areas of potential savings
  • Provide a cushion for unforeseen expenses
  • Save money for long-term goals
  • Avoid impulse spending

PHASE ONE - DEVELOP A SPENDING PLAN

Estimate your monthly income and expenditures:

  • Gather information from your paycheck stubs, most recent statements, payment booklets and available receipts.
  • Look through your check register and/or credit card bills for periodic purchases you may easily miss.
  • Divide annual figures by 12 for monthly amounts; semiannual figures by 6, etc.
  • Make "best guess" estimates when necessary.
  • Add your own specific categories.

PHASE TWO - MONITOR YOUR SPENDING

Track all purchases and payments:

  • Write down all cash purchases in a small notebook.
  • Save all receipts for review.
  • Enter your payments and purchases into your spending plan (Try this daily or weekly in the beginning.)

PHASE THREE - REVIEW YOUR PROGRESS

Compare your actual spending to your spending plan:

  • Identify areas that may require adjustments.
  • Examine your spending to reduce or eliminate some expenses.

PHASE FOUR - MAKE CHANGES

Adjust expenses and/or income to reach your long-range financial goals:

  • Continue to maintain a monthly spending plan.
  • Occasionally reward yourself for your successful money management!