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Financial PlanningBudgetingDo You Need a Plan For Spending Money? How To Create...

Do You Need a Plan For Spending Money? How To Create a Monthly Spending Plan

Do you ever feel like your money seems to slip through your fingers every month? With the rising costs of housing, food, gas and other necessities, it’s more important than ever to have a plan for spending money wisely. Having a solid monthly budget or spending plan can help you take control of your finances, build savings, and achieve your financial goals.

This article is for anyone who wants to learn how to create a realistic monthly spending plan that aligns with both short and long-term financial goals. We’ll cover the key steps for developing a personalized money management system that reduces stress and helps you make the most of your hard-earned income.

A spending plan is essential for people who feel like there’s never enough money left at the end of the month. By identifying your must-have expenses, wants, and savings goals upfront, you can allocate your income effectively and thoughtfully. With some effort and discipline, you can gain peace of mind knowing exactly where your money is going each month.

Creating a spending plan may seem intimidating, but it doesn’t have to be with the right guidance. By following the practical steps outlined here, you’ll gain the clarity, control, and confidence that comes with having a financial roadmap aligned with your values and priorities. Let’s get started!

What can you create to help you make a plan on how to allocate your money? This article will walk you through a step-by-step process to create a customized budget that works for your lifestyle. With some basic financial planning and discipline, you can make!

Key Takeaways About Budgeting & A Monthly Spending Plan

  • A household spending plan is crucial for responsible financial management.
  • It involves listing debts, calculating assets, including gross income, and itemizing expenses.
  • Distinguishing between good and bad debts is important.
  • Prioritizing financial goals and expenses is key.
  • There’s flexibility in creating a conscious spending plan, making it adaptable.
  • Allocate any surplus income using the “rule of thirds.
  • Regularly review and adjust your plan as needed.
  • Utilize apps like GoodBudget, YNAB, Intuit Mint, or Empower.
  • Knowing your true income can help you negotiate for raises.
  • Reducing expenses and managing debt is vital if cash flow is negative.
  • The process of creating a monthly spending plan can be motivating for achieving financial goals.


A monthly spending plan is simply a plan that you will create to help you allocate your money wisely and efficiently. A household spending plan can be defined as “a method for distributing your income among the mix of things you want and need“, according to the University of California, Berkely.

Budgeting is a process – a work in progress. It does not ever have to be perfect or rigid. There are four simple steps to creating a budget that you can stick to and succeed at sticking to.

Do not guess on any of these numbers, unless you have to. 

  • A. Create a sheet and list your debts, the money you owe.
  • B. Now add up everything you own, or your assets
  • C. When creating a spending plan, you use your gross monthly income. Add your GROSS income (before taxes), not your take home pay.
  • D. List all of your expenses

What Is a Spending Plan?

Spending Plan Budget
Creating a Spending Plan

A monthly spending plan is a personalized plan for how you will use your income each month. It allows you to consciously decide how you want to use your money based on your priorities and financial goals.

Unlike a restrictive budget that tells you what not to do. A spending plan instead, puts you in control. You get to purposely direct your money towards what matters most to you.

A household spending plan is a guide that you create to help you decide how to spend money as a family.  Have you ever spent money without thinking?  Without having a plan we tend to part with our money without thinking. Sometimes this will lead to little budgeting mistakes that add up over time. 

Do you want a plan for collecting and spending money? Wondering how to create a monthly spending plan?

Why You Need a Spending Plan

Without intentional planning, it’s easy to get to the end of the month wondering where all your money went. A monthly spending plan helps ensure you are spending in alignment with your goals and values. Key benefits include:

  • Saving for important goals
  • Eliminating wasteful expenses
  • Paying down debt
  • Building an emergency fund
  • Gaining control of your finances

How to Create Your Monthly Spending Plan

Follow these steps each month to create your personalized budget plan:

  1. List your net income after taxes/deductions
  2. Identify fixed expenses and debt payments
  3. Estimate averages for variable expenses like food, gas, etc.
  4. Budget for savings contributions
  5. Allocate discretionary expenses
  6. Track expenses to ensure you stick to the plan
  7. Adjust categories as needed each month

Get Help Sticking to Your Plan with Empower

The Empower app will make money management easy to track with features like automatic tracking, budgeting tools, goal setting, and customizable categories. Having your plan accessible through a secure mobile app makes it simpler to follow.

Take control of where your money goes each month. A spending plan puts you back in the driver’s seat of your finances so you can intentionally spend in line with your goals and priorities. What are you waiting for? Start planning your budget today

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What is the difference between a budget and a spending plan

Telling someone to create a budget usually gets the same reaction as eating a lemon.  No one enjoys the thought of a budget.  That is why I prefer to create a money management plan.  Choosing to not have a saving and expanse plan is like having a goal of losing weight, but never stepping on the scale to know where you started from.

A spending plan can be defined as “a plan to show how a person or an organization… will spend the money that is available”.


Now that doesn’t sound so difficult, does it?  The action of stepping on a scale isn’t difficult either, but…  A good way to plan your spending is simply to create a way to help you spend your money wisely and efficiently to help you meet your financial goals.  A good financial budgeting plan will plug up the leaks in your budget.  The most important thing a spending plan will accomplish is to help you think about how you are spending your money to design and make the best choices that you can.  

Making Financial Goals with a Spending Plan

Setting clear financial goals is crucial to achieving what’s most important to you. A spending plan allows you to thoughtfully decide where your money should go each month. Unlike a restrictive budget that tells you what not to do, a spending plan puts you in control.

  1. First, identify your priorities – save for retirement, pay off debt, buy a house, etc.
  2. Then, create a realistic plan to direct your income towards those goals.
  3. Automate savings and bill payments so the important stuff is handled first.
  4. With the remaining cash, consciously choose how to allocate it.

Having a proactive plan for spending rather than reacting month-to-month leads to feeling empowered and making steady progress. A a plan for making and spending money, brings your financial goals within reach.


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How to Create a Monthly Spending Plan

Here are some tips for creating a monthly spending plan:

  • List your net monthly income – Know exactly how much money you have coming in each month after taxes and deductions.
  • Identify fixed expenses – These are the non-negotiable expenses like rent, car payment, insurance, debt payments, etc.
  • Estimate variable expenses – Things you spend on each month that vary like groceries, gas, dining out, entertainment, etc. Track your past spending to estimate averages.
  • Budget for savings – Pay yourself first by setting aside money for short and long term savings goals. Automate transfers if possible.
  • Allocate spending money – After fixed expenses and savings, anything left over is for discretionary spending.
  • Track and adjust – Monitor your actual spending to see if adjustments are needed in any categories to align with your goals.
  • Build in flexibility – Have some wiggle room for unexpected expenses. If you go over budget in a category, look for another to cut back on.
  • Revisit and revise – Review your spending plan regularly and update as needed based on your evolving financial situation and goals.

The key is deciding your priorities and creating a realistic plan to direct your money in a way that empowers you to achieve what matters most.

Unlike a budget, which looks backward, a conscious spending plan allows you to look forward”

Best-Selling Author Ramit Sethi

A spending plan or budget includes

What money do you have available

What money is coming in?

Your earnings, side money, child support/alimony, investment income, etc.

What is important to you financially? 

Prioritizing your spending

What is going out?  

Monthly bills: mortgage/rent, food, transportation, utilities, clothing, entertainment, insurances, credit cards, etc

Prioritize your goals

Decide where your money is going.

Savings, vacations, pay off debt, retirement and college, etc

A Good Personal Spending Plan Is One That Works For You!! 

There is no right or wrong answer to how to develop a spending plan that works for you.  That is the beauty of it, don’t be intimidated by it. A good budget is one that is realistic.  A budget that you can stick to

The best spending plans are the ones that you see results from.   Budgeting is a process – a work in progress.  You can tweak it as necessary.  It does not ever have to be perfect or rigid.    

Kakeibo Journal and Method Budgeting – How It Could Save You

Kakeibo Journal and Method Budgeting – How It Could Save You

Kakeibo Method of Budgeting and Journal Good news and bad news.  Which one do you want first?  Okay, the good news.  Americans are budgeting more than ever before!! “86 percent of respondents track their monthly income and expenses.” –debt.com poll Even better news – “Fully 85 percent of those who budget say that simple process … Continue reading

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Get Started – Figure Out Where Your Money Goes

Before you begin…

Monthly Budgeting Calculator
Monthly Budgeting Calculator

Step 1 – Gather Your Information

  • A plan for making and spending money
  • Statements
  • Bills
  • Pen, paper and a calculator

As you gather your information, a best practice is to keep separate piles.

  • Expenses
  • What I owe
  • Earnings 
  • What I own
Spending Plan income minus expenses and what i own minus what I owe

Track Your Income and Expenses

Add Up You Income  

Annual Income Calculator
Annual Income Calculator
  • Put in your GROSS income (before taxes), not your take home pay. 
  • You should list your taxes, insurance, savings, etc as separate lines.  Why
    • First, it is more accurate
      • Secondly, as these numbers all change in the future, it will make it easier to update your future spending plan.
  • List all of your income sources – all money that comes in. 
    • Work, child support, alimony, trust fund, etc.
  • Add taxes, health insurance, savings, etc to your expenses – if you didn’t previously.
  • If your income varies, that’s okay, just put the average monthly amount.

This one may feel like the one you have the least amount of control over, I disagree.  In todays economy, workers are in demand.  You may enjoy where you work, but you owe it to yourself and your family to know what your true worth is. 

At least when you know that dollar amount, you can then make a decision for what is best for you.  You may be able to ask for a raise from your current employer.  You may choose to move on to another employer.

You can choose to further your education and certifications, making you mare valuable.  You may choose to take on a few extra hours when available.  You may choose to do side gigs.

It may not seem like a lot, but to earn an extra $1,000 a year could literally be the difference between you reaching your goals or not.  $10,000 a year – that certainly wouldn’t.  It is extremely common for my clients to find they were missing out on tens if not hundreds of thousands of dollars currently!!!  Do it for your family, find out your true value.

Listing Expenses In Your Spending Plan

Let’s start organizing our expenses first, since this is the least fun.  Do not guess on any of these numbers, unless you have to.  If the amount changes each month, take the average amount. 

This is a vital first step, so let’s do this right. 

When working with people who guess, I have always found that they either underestimate expenses or forget many.  These are the mystery dollars that go missing each month. 

And the spending plan will help you capture as many of these as possible.  Be as accurate as you can.

Fixed Expenses vs. Flexible Expenses

As you are listing your expenses, I suggest you put a * next to the expenses that are  irregular and not monthly. By doing this it will help you save and plan for these expenses throughout the year. 

The money will be set aside in advance, for these expenses.

Include saving towards your short and long term goals as expenses as well.

To save yourself time and be more accurate, pull up your banking and credit card accounts online.  Many of these companies will list your annual expenses and categories for you. 

Take each one and divide by 12 with your calculator to determine your monthly expenses.

Now that you have completed your expense list, add up all of the numbers.  What number did you come up with?  What are yur thoughts, did it surprise you?  Was it higher or lower than you expected it to be.  If you are sure the real expenses are higher, put a line item for mystery dollars into your sheet

Reduce Your Spending: Debt and your Budget

Create a sheet and list your debts, the money you owe.

  1. On each line put down the name of the debt, the total amount you owe, the interest rate, the monthly due date, minimum amount due, and how much you plan to send each month.
  2. This includes payments such as car, mortgage, student loans, credit cards, etc.
  3. Transfer each debt payment to your expense sheet, if it isn’t already on there.
  4. Add up all of the monthly payments from this sheet
    • How much do you spend on debt each month? 
    • Do the interest rates seem high? 
    • Are you paying more than the minimum amounts each month? 
    • Do you feel that the balances are going up or down each month?
  5. Keep this debt sheet handy


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What you own? – ASSETS

  • How does this list look to you?  Is there anything you want to add to this list over the next few years?  If yes, take out that sheet of paper again.  This is how we develop our financial goals that we will need when we start to create our financial plan… 
  • So, what is it that you want to own?  Why?  How do you plan on getting it?  Do we need to save towards this goal?  How much, when, where, how? 30 Day Savings Challenge
  • Can we do anything better here?  Ideally we want to own things that will go up in value, and not necessarily own things that will go down in value.  Ex. an expensive house makes more sense to invest in than an expensive car. 
  • If a $500,000 house goes up 5% a year, its worth over $600,000 in four years – a gain of $100,000.  Conversely a $75,000 car is probably worth no more than $40,000 in four years, a loss of $35,000.
How Assets Affect Your Monthly Spending plan
  • Add up all of your assets – what you own.
  • House, car (not lease), savings, etc.

The last step, one that will help you massively in the future, is to download an app to help you with this moving forward. 

Apps such as GoodBudget, YNAB vs Intuit Mint, Empower are all good and useful for this.  If you have a system or App that you prefer, please mention it in the comments below.

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Okay, we completed the first and most difficult step.  We just took an MRI of our current financial health.  Did anything surprise you, positively or negatively?  Again, comment below…

What we owe? DEBT

  • Similar though to above.  How does this look to you, how does it make you feel?  Is there anything you want to remove from this list?  Again, this is how we develop our financial goals, add this to your list again…
  • Why?  How you plan on reducing this debt?  How much, when where how.  
  • Can we do anything better here?
  • Some debts are better than others.  Som are tax deductible.  Some debts are on assets that are growing, such as a house.  Some debts have very high interest rates, others may be zero percent interest rate.  We want good debts, not bad debts.  Are there any opportunities to reduce our current interest rates?  This will us to pay down our bad debts faster.

best books on debt budgeting book spending plan

Crunch Your Numbers

  • Take a sheet of paper, and draw a line down the middle from top to bottom
  • Now draw a line down the middle from left to right
  • You should have created four squares
    • Now up your income, and put that number in the top left
    • Add up your expenses, and put it in the bottom left
    • Total what you own, and put it on the top right
    • Add up what you owe, put it in the bottom right
  • How do you feel looking at these numbers?  
  • If you could only change one of these numbers, which one do you choose to change?  Why did you choose that one?  What have you done previously to change that number?  What has prevented you from changing it to the number you want it to be today?  How do you see yourself overcoming this to make sure this number has changed by this time next year?  What are you willing to do to change this number?
  • This is key.  I need you to answer each of these questions.  And WRITE THE ANSWERS DOWN.  Why?  Because these are going to be your motivators to create the change you want.


  • Now take out your calculator.
  • Put in your income, and subtract your expenses.  Is this a positive or negative number?  If it is positive, congratulations.  We now move to my rule of A THIRD, A THIRD A THIRD.  
  • If this is a positive number – take this number and divide it by three.
    • ⅓ will go towards your debt repayment
    • ⅓ will go towards increasing your savings (Try the viral cash stuffing envelope trick)
    • ⅓ will go towards rewarding yourself -only you can determine what that reward is.  Is it more savings?  Is it paying down more debt?  Is it saving for a car, a house, building up your cash reserve?  You decide, not me.  This is YOUR plan.

  • Remember that sheet of paper that you wrote all your answers down a few minutes ago?  Take that out again.
  • Write down 1/3, 1/3, 1/3.  Write down the total amounts, and where you have decided to put them.  Again, this is your spending plan.  We can’t stick to it if we don’t have written actionable plans to measure our progress by.
  • Now let’s go through each of the four corners of this sheet of paper.  Lets see if there are any gaps we can identify.  I will save the cost & expenses for last.  This time, let’s focus on the good stuff.




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What you spend? Expenses

What is the last step in planning your budget?

Yep, I saved this one for the end.  When most people cringe at a budget, this is what they assume everyone will focus on.  And all the fun things we enjoy, they are told to wipe out.  Well if you’ve completed the above three steps – you will be shocked to find out you can INCREASE the amount you start spending on the things you enjoy.  An extra vacation, etc.  Remember my rule of Thirds?  Yes, for every hundred dollars you found above, you can increase your discretionary spending by $30.  So go ahead, reward yourself.

Now if we got to this point and your monthly cash flow is negative.  And we couldn’t squeeze anymore blood from the stone, and you are still negative.  Well, now we have reached that point that we did not want to get to.  And now I am whipping out the B Word – Budget…  No more spending plan, we are going to the dreaded budget.  We have exhausted all of the above, you need to make some drastic changes to your finances.  Today.  

The good news, this is temporary and not permanent.  The painful budget will last as long as you want it to. If you dug a hole too deep, I will be honest here – this isn’t a band-aid coming off.  It will be painful.  But it’s necessary.  We need to spend time finding ways to reduce your expenses and get rid of debt ASAP.  The good news is, I will be putting together a very detailed program on exactly how you can do this shortly.

How To Stop Spending Money

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Next Steps For Creating a Budget

Following a monthly spending plan takes dedication, but the payoff of financial control and peace of mind is immense. By summarizing your expenses, setting budgets, and allocating your income thoughtfully each month, you can build savings, achieve goals, and avoid the stress of empty bank accounts.

The key is to start simple – track where your money is going now, identify needs versus wants, and build your ideal spending plan from there. Adjust and refine your money management strategy until it aligns seamlessly with your lifestyle and values. With the right frameworks in place, you’ll find you worry less about finances and have more energy to focus on what matters most.

We covered a lot of ground on optimizing your monthly budget – now it’s time to take action. Begin tracking expenses today and evaluate spending habits over the next month. Make small changes to align behaviors with your goals, then formalize your learnings into a comprehensive spending plan.

Hopefully this guide provided insights and techniques for thoughtfully managing your hard-earned money. Please let me know if you have any other questions on clever money management strategies and savings tips! I’m happy to offer more personalized guidance for your financial situation.

For exclusive content on maximizing your income and reaching your money goals faster, be sure to sign up for my free newsletter below. Thank you for your time – now get out there and take control of your finances!

Michael Ryan
Michael Ryanhttps://michaelryanmoney.com/
Who Am I? Wondering who's behind the financial wisdom you're about to receive? I'm Michael Ryan, a retired financial planner. My journey didn't stop at retirement; it pivoted. Now, I serve as your personal financial coach, dedicated to guiding individuals and entrepreneurs through the financial maze. Why Listen to Me? Why should you heed my advice? Simple. My expertise is not just academic; it's forged from years of hands-on experience. But don't just take my word for it. I've been quoted and featured in esteemed outlets like US News & World Report, Business Insider, and Yahoo Finance. For more proof, feel free to check out my press accolades 'here'. What's in It for You? Got burning questions about money? Whether it's budgeting, investing, or retirement planning, I've got you covered. Through my 'blog', I'm on a mission to democratize financial literacy for all.
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