Spending plan
Spending plan is a plan focused on somebody's financial goals. This special document is designed to help understand current spending habits [1]. It gives money a specific plan of action to follow, which includes plan to have a successful financial future [2].
According to Bridgforth G. a spending plan is not to limit spending but to identify what we need for a quality of life that has a sense of balance and well-being. It is a blueprint to help keep our financial house in order. Instead of tightening up and restricting ourselves, we approach this plan of estimated expenses and income with a sense of openness [3].
In the view of Bucci S. a spending plan puts you in control of your finances, allowing you to decide how much money to spend on stuff you want. A spending plan tells you just how much available cash you have to meet your obligations and allows you to set some aside to have fun, too [4].
Plan not a budget
As stated in The Guru Guide to Money Management we should try to avoid using the word "budget" and use "spending plan" instead.
Here is why:
- spending plan = a plan
- spending plan = something you create
- spending plan = something you can control
- spending plan = something flexible
A spending plan does not dictate how much you should spend or what you should spend money on. A spending plan puts you in control of your finances. It is not about deprivation; it is about making choices [5].
Sections
There are five sections of a spending plan[6]:
- Income
- Taxes
- Debts
- Lifestyle
- Savings
Constructing a spending plan
As stated in The Guru Guide to Money Management there are few steps to construct a spending plan [7]:
- Determine your average monthly income
- Make a list of your expenses categories
- Draft your monthly spending plan
- Activate your monthly spending plan
- Count and record
- Rethink optionals
- Prepare next month's spending plan.
| Spending plan — recommended articles |
| Top down budgeting — Qualified automatic contribution arrangement — Line item budget — Master budget — Cash control — Amortization table — Net wage — Disclaimer trust — Cash Budget |
References
- Bernard A. (2011)., The Puzzle: Putting Together the Pieces Toward a Successful Financial Future: Putting Together the Pieces Toward a Successful Financial Future Xlibris Corporation
- Boyett J., Boyett J. (2003)., The Guru Guide to Money Management: The Best Advice from Top Financial Thinkers on Managing Your Money John Wiley & Sons, Inc
- Bridgforth G. (2002)., Girl, Get Your Money Straight: A Sister's Guide to Healing Your Bank Account and Funding Your Dreams in 7 Simple Steps Crown Publishing
- Bucci S. (2014)., Credit Repair Kit For Dummies John Wiley & Sons, Inc
- Mercer Advisors Inc. (2019)., Special Raport: My Spending Plan The Science of Economic Freedom
- Towner D., Tofilon J. (2002)., Good Sense Budget Course: Biblical Financial Principles for Transforming Your Finances and Life Willow Creek Community Church
Footnotes
Author: Paulina Wolnik
