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How to Make a Spending Plan

Making a spending plan is not fun for most people, but it may be beneficial to get your financs back intor healthy shape.  a spending plan deals with handling certain expenses with structure and a finite amount of money.  By having a spending plan, you will protect yourself from spending too much or getting tempted to buy things you can’t afford with a credit card.

  1. First make a list of your general monthly expenses.  Do not include utilities or residential payments which can be imporved with good habits.  What you should list are items or products you pay for on a regular basis and entertainment expenses, which you can directly change.
  2. After you have listed your expenses for entertainment, food and other misc items, it is time for you to take out the receipts.  You should always keep receipts for at least a month.  Write down how much you spend on average in the past month on everything on the list.
  3. Figure out where you may be able to cut down on your spending.  The whole point of a spending plan is to prevent you from over spending, but it also helps you save money in general.
  4. Regardless if you found something to  cut down on or not put a budget on each of the expenses on your spending plan.  Make sure you are comfortable with the budget on each item, as that total will be non-negotiable!
  5. Finally, set aside the amount as the budget for each expense in separate envelopes.  This money will be used to pay for things in your spending plan.  You will not be adding more money to any envelope until the end of the following month.  This will help you practice discipline and good habits in spending money!

Article from NST dated 14 Oct 2009

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