Make a spending, savings plan

February 03, 2011|Lynn Little

Making a spending and saving plan puts you in charge of your money.

A spending and saving plan will help you stretch dollars and get more for your money.  It will help the money last longer than the month. A spending and saving plan will help you work toward your financial goals and pay your bills on time. It will help you spend wisely and it will help you set aside money regularly for savings and emergencies.

A spending plan will help reduce the stress of not knowing whether you have the money to pay bills when they are due. It will also give you a sense of control over your money, rather than letting your money control you.  

The best plan will be based on what is important to you and your family. It is a good idea to let everyone in the family have a role in deciding how to spend the money. When children are included in money discussions, they learn valuable skills and they are more likely to cooperate with the plan.

Before you decide where your money really must go, you need to determine your financial goals. What is important to you and your family? Are you spending money on those things or is the money just drifting away? Goal setting helps guide your decision-making and it helps you set priorities.  

To develop your spending and savings plan you first need to determine how much money you have available every month. What are your income sources? How much money do you receive and when is it available?  

To take charge of your money, you need to understand your spending patterns.  Where does your money go? What fixed expenses do you have? What flexible expenses do you have?  

Once you have tracked your income and expenses you are ready to develop a plan for future spending. Making a spending plan is the first step toward reaching your financial goals. Writing out your plan helps you set saving and spending priorities.  

When you make a spending plan, use a time period that works for you — weekly, monthly or some other period. Be realistic as you plan how to spend your money. It is hard to break old spending habits. Success often comes in small steps. A spending plan will also help you remember when bills are due. You will save money by avoiding late payments or bouncing checks.  

Make saving for emergency expenses and family goals an important part of your spending plan. Many people save by removing change from their pockets at the end of the day and dropping it into a savings jar. Others have money automatically deducted from their paycheck and placed into a savings account.  

Another way is to pay yourself first. This means that when you get a paycheck, you place money into a savings account for your goals and future needs before you pay routine expenses.  

If you believe that you don't have enough money to start saving, think about ways to cut back. Do you eat out a lot? Can you cut back on candy, cigarettes, coffee, lottery tickets, magazines or sodas?

Spending less and saving more requires motivation and self-discipline. Starting to save can pay big dividends in the future. Even small amounts saved regularly can add up to large amounts in the future.  

Lynn Little is a family and consumer sciences educator with University of Maryland Extension in Washington County.

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