you’ve learned about the parts of a spending
time to create one.
A good spending plan has
three basic characteristics:
It lists all of your sources of income.
It lists all of your expenses, and how much money you plan to spend
on each expense.
It’s realistic.This quality
is the most important. Your spending plan must be realistic in order
To create your plan, start by listing your monthly
income and expenses. Remember, these totals must match!
Keep working on them until they do. Click on
the spending plan worksheet below to begin. First,
though, let’s look at the parts of a spending
plan and see why they’re important.
So far, you’ve developed the first two aspects of your spending plan: a
list of income and a list of expenses. Now it’s time to work on the third
aspect: make it realistic! All the planning in the world won’t help if
you can’t live with your plan. Now’s the time to see what works and
The best way to see if your spending plan works is to track your progress. In
other words, keep track of what you make and what you spend. Here’s a method
that can help. Every day for 30 days, write down all of your expenses and all
of your income. You may wish to use a small notebook just for this purpose. Keep
the notebook with you and write down every time you spend money. List the amount
and what the expense was for.
At the end of the month, go back and add up your expenses in each category. Compare
what you actually spent to your spending plan. How’d you do? Was
your spending what you expected? Or were you way off in some areas?
If your actual expenses match your spending plan, fantastic! If not, don’t
worry. You’ll just need to make some changes. Your goal is to create a
spending plan that works for you. There are no set rules on how to do this. The
key is to create a plan that you can live with.
If you’re spending too much, you have
two choices. You can increase your income, or you can reduce
your expenses. Most students have limited income. So you
may have to get creative. Stretch your money as far as it
can go! Here’s how:
Ask for student
discounts. Many programs have discounts
for students. If you’re not sure, ask. Showing your
student ID may get you savings on movies, transportation
and even meals. Every little bit helps!
habits. Take a look at your lifestyle and
see what it’s really costing you. For instance, if
you buy snacks and soda at school everyday, you may be
spending $3 per day on food. That might not seem like much,
but it adds up to $1,095 per year. That’s $91.25
a month, just on one habit!
Think before you
spend. Before you make a purchase, consider
it carefully. Ask yourself, “Is it a good idea to
spend money on this right now?” Think about the big
picture. If cash is tight, make sure you can cover the
things you really need.
Shari Juarez, 17, is a senior in high school in Detroit. As a senior, Shari
faces some significant expenses this year. “Our prom ticket alone
was $90,” Shari said. “Then we had to pay to have our hair
done. We also paid for our dresses, limos, and dinner.” In addition
to the prom expenses, Shari will pay senior dues of $150 for the year. “The
dues cover our senior jerseys, memory book, and senior brunch,” Shari
said. On top of it all, Shari and her friends are focused on saving for
Shari is grateful that her parents help her out with some expenses. She
plans to get a part-time job to cover the rest. Some of Shari’s friends
have gone to great lengths to keep their senior costs down. “I know
people who imported fabric to have their dresses made less expensively,” Shari
said. She and her friends travel to neighboring cities to shop where prices
are lower. With costs as they are, Shari believes, it pays to be creative!
Keep working with your spending
plan until it works for you. It may take a while to adjust your
spending to match your plan. That’s fine—just stay
with it. A good spending plan helps you know where your money goes and it keeps
you in control.
If you can learn to live within your plan, you’ll master the key to managing
money. You’ll always live below your means. This skill will help you use
your money wisely—for life!
In the next section, you’ll learn about the importance of giving to others.
Also, you’ll have a chance to practice donating to a nonprofit of your
choice. To learn more about money management before you move on, see the Resources section.