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The Spending Plan: How to Flexibly Spend Your Money

By following the steps and tips outlined in this article, you can create a spending plan that sets you on the path to financial well-being.

Creating a spending plan is an essential step toward achieving financial well-being.

Unlike traditional budgets, which may feel restrictive and focused solely on tracking expenses, a spending plan provides a flexible framework that empowers you to allocate your money intentionally, prioritize your values, and achieve a healthy balance between spending and saving.

What is a Spending Plan?

A spending plan, also known as a cash flow plan, is a personalized roadmap that outlines how you will allocate your income to cover expenses, savings, and financial goals over a specific period, typically a month. It is part of financial planning for those who want a mindfulness approach.

What Does It Include

A comprehensive spending plan typically includes:

IncomeTotal monthly income from all sources.
Fixed ExpensesEssential expenses that remain relatively consistent each month.
Variable ExpensesDiscretionary spending categories that may fluctuate based on lifestyle choices.
Savings and GoalsAllocating funds towards savings goals, retirement accounts, and other financial objectives, like financial independence.
Emergency FundA designated fund to cover unexpected expenses or financial emergencies.

What’s the Difference Between Spending Plans and Budgets?

While spending plans and budgets serve similar purposes, there are some key differences:

  • Flexibility: Spending plans offer more flexibility than traditional budgets, allowing for adjustments and prioritization of values and goals without strictly categorizing expenses.
  • Focus on Values: Spending plans prioritize aligning spending with personal values and goals, whereas budgets may focus more on tracking and categorizing expenses.
  • Intentions vs. Restrictions: Spending plans focus on setting intentions and guiding financial decisions, whereas budgets may feel more restrictive and focused on limiting spending within predefined categories.

How to Create a Spending Plan

Creating a spending plan involves several key steps:

Step 1: Assess Your Income

Begin by determining your total monthly income, including wages, salaries, bonuses, side hustle earnings, and any other sources of income.

Source of IncomeMonthly Amount ($)
Side Hustle Earnings$300
Other Sources$200
Total Monthly Income$6,500

This table breaks down the various sources of income and calculates the total monthly income by summing up all the individual sources of income.

Learn more about listing your income.

Step 2: Identify Fixed Expenses

Next, list all your fixed expenses, including rent or mortgage payments, utilities, insurance premiums, loan payments, and subscription services. These are expenses that remain relatively consistent each month.

ExpenseMonthly Amount ($)
Insurance Premiums$100
Loan Payments$300
Subscription Services$50
Total Fixed Expenses$1,800

This table lists various fixed expenses and calculates the total fixed expenses by summing up all the individual expenses.

Step 3: Estimate Variable Expenses

Estimate your variable expenses, such as groceries, dining out, entertainment, transportation, and discretionary spending. These expenses may fluctuate from month to month based on your lifestyle and choices.

ExpenseMonthly Amount ($)
Dining Out$200
Discretionary Spending$200
Total Variable Expenses$950

This table lists various variable expenses. Since these expenses may fluctuate from month to month based on lifestyle and choices, they are subject to change. It calculates the total variable expenses by summing up all the individual expenses.

Step 4: Allocate Funds to Savings and Goals

Determine how much you want to allocate towards savings goals, such as an emergency fund, retirement accounts, or specific financial goals like buying a home or taking a vacation. Set aside a portion of your income for these goals. Consider automating your finances to help you reach these goals.

Savings GoalMonthly Allocation ($)
Emergency Fund$500
Retirement Accounts$600
Buying a Home$400
Other Financial Goals$200
Total Savings Allocation$2,000

The table lists various savings goals and represents the portion of income set aside for these priorities before allocating funds to discretionary spending.

Step 5: Balance Your Plan

Review your total income against your total expenses and savings goals. Ensure your spending plan is balanced, with income covering all expenses and savings targets. Adjust as needed to ensure that your plan is realistic and sustainable.

CategoryMonthly Amount ($)
Total Income$6,500
Total Fixed Expenses$1,800
Total Variable Expenses$950
Total Savings Goals Allocation$2,000
Total Expenses and Savings Goals$4,750
Remaining Income$1,750

This table compares the total monthly income of $6,500 against the total expenses and savings goals. The total expenses and savings goals amount to $4,750, leaving a remaining income of $1,750. This remaining income represents the amount available for discretionary spending or additional savings.

Spending Plan Tips for Success

  • Review Regularly: Review your spending plan regularly to reflect your current financial situation and priorities. Make adjustments as needed to stay aligned with your goals.
  • Track Your Spending: Keep track of your monthly expenses to monitor your progress and identify areas where you may need to adjust your spending.
  • Be Flexible: Recognize that unexpected expenses or changes in circumstances may require adjustments to your spending plan. Be flexible and willing to adapt as needed to stay on track with your goals.
  • Practice Self-Discipline: Exercise self-discipline when it comes to discretionary spending. Before making a purchase, pause and consider whether it aligns with your values and goals.
  • Celebrate Progress: Celebrate milestones and achievements along the way to stay motivated and inspired to continue following your spending plan.


Creating a spending plan empowers you to take control of your finances, prioritize your values, and achieve your financial goals. By following the steps and tips outlined in this article, you can create a spending plan that sets you on the path to financial well-being.

Jason Vitug

Jason Vitug is a bestselling author, entrepreneur, and founder of phroogal.com and thesmilelifestyle.com. His purpose to help others live their best lives through experiential and purposeful living. Jason is also a certified yoga teacher and breathwork specialist and has traveled to over 40 countries.

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