How to Stay on Top of Your Finances With a Monthly Spending Plan

Careful analysis prevents surprises

Mixed race woman paying bills on digital tablet
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Just about everyone, except the independently wealthy, worries about their finances from time to time. Whether you're just starting out and in your first real job; are in midlife with heavy child care, house maintenance, and college expenses; or are in retirement mode, staying on top of your finances is a major priority. One of the most effective ways to do that is to make a monthly spending plan so you know just what you are spending and where you are spending it. You'll find out if you are spending a lot of money on things that don't really enhance your quality of life (like too many regular stops at the coffee bar), and you'll also feel confident that you can go ahead and have that killer dinner out and not break your budget since you've planned for that extravagance.

A detailed spending plan will help to eliminate budget shortages from the list of things you worry about. Making a monthly budget plan takes about an hour.

Here's How

  1. Total your earnings: Calculate how much money you expect to make during the month after taxes and other payroll deductions (only include income sources that you know you can depend on). Earnings: ______________________
  2. Assess your regular monthly expenses: Make a list of all of your regular monthly expenses. Include rent or house payment, car payments, minimum payments on debts, food, all types of insurance, and utilities. Don't forget about any money that you regularly spend on fun things like eating out, entertainment, or hobbies. Monthly expenses: _______________
  1. Subtract monthly expenses from earnings: The resulting figure is how much you can expect to have left after covering all of your regular monthly expenses. Remaining money: _______________
  2. Subtract any extra expenses: Review your plans for the upcoming month and make a note of any extra expenses that you are likely to incur. This could include scheduled car or home repairs, clothing, medical or dental bills, gifts, trips, parties, extra meals out, and holiday-related purchases. Subtract your extra expenses from the figure that you arrived at in Step 3 to get what you'll have left after these irregular expenses. Remaining money: _______________
  1. Build in a cushion: Look at how much money you expect to have left after covering all of your anticipated expenses and decide if what remains is enough cushion against unexpected expenses. If you’re not sure how much extra to build in, 10 percent each month is a good rule-of-thumb. Cushion: ______________________
  2. Rework your budget: Now comes the hard part. If your budget comes out on the negative side, go over your regular monthly expenses again and look for places to make cuts. Keep at it until your budget works.
  1. Invest in yourself: If you find you have money left after you check all these boxes, think about using some or all of it to pay down debts or add to a savings account or investment portfolios. Money to invest: ___________________


  • To allow for adequate planning time, make your spending plan before the start of the month.
  • Change your spending plan if your circumstances change.
  • No two months are exactly alike so make adjustments if things change.