Do you ever wonder where your money goes each month? Are you spending your money on the things most important to you? Or do you feel your money is “frittered away”?

It’s a SPENDING PLAN, not a budget! While people used to “go on a diet” and focus on the restriction of not eating, things have changed. Now we “eat healthy” to focus on the positives. It’s the same thing with spending plans versus budgets. A spending plan guides where your money will be spent so you can focus on making sure your money is going towards what is most important to you, rather than restricting what you can and can’t spend your money on.

Ready to try a spending plan? Here’s the first step…

Your first step is to decide what goals you and your family have over the next year, five years, and beyond. After you’ve made a list of these goals, break them up into short-term, medium-term, and long-term goals.

When you’ve finished making your goal list, estimate the cost of each goal. Project the cost of future goals, and then calculate how much money you need to set aside each period. Prioritize your goals, and then make a schedule for meeting these goals. For more detailed information, click here to download a PDF handout about Understanding Your Spending Plan.

Now what?

Okay, so now you’ve sat down with the family and figured out your goals. How do you make the actual spending plan? First, decide how you are going to track all of your expenses. Are you going to create a spreadsheet or write things down in a dedicated notebook? After you’ve decided, keep track of your expenses for two to four weeks. Include everything, even things that seem small (did you put 25 cents into the parking meter to run into the store? Count it! It adds up).

After your initial period is over, analyze what you spent money on. What is essential and what is non-essential? Should you make coffee at home instead of heading to Dunkin’ Donuts or Starbucks every morning before work? If you’d like more information on creating your spending plan and how to decide what is necessary, click here to download a detailed PDF handout about Making Sense of Your Dollars and Cents with a Spending Plan.

Still want more information? Feel free to download the handouts below to educate yourself on spending plans and decide what will work best for you.

Spending Plans and Personal Finance     ||        Thrift is in     ||     Cash vs. Credit