Why Have a Spending Plan?
Barbara’s spending plan helps her sort out her “I want” expenditures from her “I need” expenditures. By paying attention to what she buys each month, she quickly can identify any leftover money.
With a spending plan, Barbara doesn’t have to focus on her day-to-day or month-to-month expenses as much — they don’t really change that much anyway. She focuses on allocating her leftover income to the things she values most, such as her vacation with friends and visit with her son.
Rather than a fixed “budget” that stays the same from month to month, Barbara revises her spending plan whenever there is a rise in expenses. Of course, if she spends less than usual, then she has more funds to allocate to savings or to put toward her goals.
Barbara’s Priority Goals
Her spending plan is flexible, but Barbara has some key goals that remain the same. No matter what, she makes decisions that support these goals:
- To be debt-free.
- To save money every month.
- To save for retirement.