We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

How do I Make the Best Spending Plan?

By Felicia Dye
Updated May 17, 2024
Our promise to you
WiseGEEK is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGEEK, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

If you want to develop a good spending plan, you need to accurately determine your income. Deduct your required expenses from that amount and try to reduce your debt by paying extra on credit cards and loans. Set an amount to contribute to your long-term savings and investment accounts. While you want to make sure all of your obligations are covered, your spending plan should not be unrealistically stringent.

The development of your spending plan should begin with an accurate account of how much money you have coming in. When you are figuring this out, you want to calculate all income, including sources such as child support and odd jobs. Only once you have done this will you be able to properly determine the best method to spend your money. Before you make those decisions, you should be ready to commit to them. A budgetary plan cannot be effective if you do not stick to it.

After determining how much income you have, you need to begin listing and deducting your mandatory expenses from that amount. This will include items such as rent, utilities, and auto insurance. The costs of some items may fluctuate, such as electricity and telephone bills. It is important for you to try to allot for a reasonable average in your plan for these expenses. Remember that it is better to predict an amount in excess than it is to have insufficient funds when it is time to pay your bills.

When you are developing your spending plan, debt reduction should be a primary goal. If you have loans or credit card balances and you can pay more than the minimum, you should. Old debts that you have been ignoring should be included in your spending plan, even if you can only afford to pay small amounts for them.

Personal finance professionals commonly recommend that people try to save at least 10 percent of their income. This amount should be considered long-term savings. If you want to begin investing and you do not have other available income, you may want to consider diverting some of the funds that would be for savings. Money needed in the short-term future, however, for items such as a new car or a vacation, should not be taken from this 10 percent unless you already have a significant amount of long-term savings.

If your income varies each month, you may have to adjust your spending plan accordingly. This does not mean that you should abandon all standards. You should have set minimums in place for certain financial obligations. Those expenses, such as old debt, that must vary when your income varies should be obligatory any time funds are available.

A good plan is one that is realistic. It sounds positive to develop a spending plan that pays your bills, reduces your debt, and allots money for savings and investments. Being a human, however, means that you will most likely succumb to human nature at some point, which involves spending for unnecessary and leisure items. Whether it is for treating yourself to lunch, buying house wares, or going to a club, your spending plan should include at least a small amount for pleasure spending.

Being realistic also means that you should not try to spend every cent. Doing so is likely to create financial stress. No matter how well planned your budget is, there will be times when unexpected expenses arise. This may happen before you have built up a significant amount of savings, so it is always a good idea to leave some money unaccounted for. If it is not needed, you can add it to your savings or investment accounts.

WiseGEEK is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

Discussion Comments

WiseGEEK, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGEEK, in your inbox

Our latest articles, guides, and more, delivered daily.