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What Is A Spending Plan?

You can reach your savings goals by using a spending plan.  A spending plan is a strategy for saving and spending money.  It is meant as a guide to help you track how much money comes into your home or organization and how it needs to be divided to meet expenses, reduce debt and reach your savings goals more easily.  A spending plan is the first step in taking control of your personal finances.  Spending plans can be used to:

1. Help you put aside more money to reach your savings goals or reduce debt:

If your goal is to save money for some purpose (e.g., travel, a car), but you find yourself without any extra dollars at the end of the month, a spending plan can help you reach your goal.

2. Prepare for expenses:

There are some expenses that occur on a regular weekly or monthly basis (e.g., groceries, rent, gas) and others that occur once or twice a year (e.g., car insurance, holiday presents).  If you have a sense of these expenses ahead of time, you can prepare by setting money aside on a regular basis.

3. Be ready for unexpected expenses:

While it is hard to predict some expenses, such as fixing your car or home when something breaks, you can use your spending plan to set aside a little extra money each month for such unexpected needs.

4. Take control of how you spend your money:

As you pay more attention, you may realize that you are spending a significant amount of money on certain items without realizing it.  For instance, buying a $2 coffee latte (or two cans of soda) each weekday adds up to $520 dollars a year!  And since those are after-tax dollars you're spending, consider how much more you have to earn to even have that $520 to spend.  A good spending plan helps you make decisions about how to spend your money so that you can afford the things you really want.

Developing a spending plan is a process, but it need not be a complicated or painful one.  MySpendingPlanTM's free tools are designed to make the process easy and make you more successful with managing your money.

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