Making a Spending Plan

The key to budgeting and making it

work is working with what you have and making a flexible plan that works for you. Often the inflexible nature of budgeting can be a frustrating and a turn-off. Even if you've never been one for budgets it doesn't mean there isn't hope for following a plan that will get your finances on track. I'm not fond of the word budgets, I like my freedom and I think of budgets as a bore,so let's call this a spending plan. A spending plan is a better solution than a traditional budget for those who want a less rigid method for managing your money. It's all about giving your dollars some direction and taking control by taking these 5 simple steps to creating a spending plan.

1. Calculate — Determine your incoming income with a quick calculation: take your monthly income after taxes and subtract your fixed expenses like rent, insurance, and bills. The money left over is your discretionary income.
2. Think Ahead — Look into the future expenses and pick out any expenses on the horizon like vacations, car maitenence, appliance replacements and any other things that you know will put a dent in your wallet.

3. Save — Set aside a certain amount of your discretionary income for savings and for the things you identified as future expenses. I try and save 15-20 percent of my paycheck for what I call "uh-oh expenses."
4. Make a List — After you've deducted the amount you plan to save from your income, make a list of all the things you need on a weekly/monthly basis and another list of all the things you want. i.e. a new suit, a fancy dinner, a facial. Then prioritize your list.
5. Keep Track — Keep track of your spending by checking off any needs or wants that have been fulfilled. That way you can decide quickly if you have the extra funds to catch that concert this weekend with friends. Another great thing too is that you can re-prioritize. You can always save some of those wants for another month and save It's an easy way to get a clear picture of what you can and can't afford.