Your Saving Spending Plan (young adult)
Smart Money Management

Adapted with permission from the Oregon State University Extension Service publication, EC 1270. © OSU. Reprinted with permission.

A saving/spending plan won’t just help you make ends meet. It will help you save for emergencies and plan ahead for big expenses. You’ll have more control over your life and more peace of mind.

There is no one "right" saving/spending plan. Families have different goals and face different situations. But any family can follow these steps to make a saving/spending plan.

• Estimate your income.
  
  
• Estimate your expenses.
  
  
• Make a monthly saving/spending plan.
  
  
• Keep track of actual income and expenses.

Think of ways you can stay in control of your expenditures. Which of these might work for you?

• Pay all bills the day you receive money.
  
  
• Buy all necessities the day you receive money.
  
  
• Keep the bills in one place, ready to pay when the time comes.
  
  
• Make a list of all the things you plan to buy this month and know how much you can spend on each.
  
  
• Grocery shop once a week or every two weeks. Budget and spend a set amount of grocery money for a one- or two-week period.
  
  
• Decide who is responsible for handling the family money. Involve the whole family.

Step 1: Estimate Your Income

The first step in making a saving/spending plan is to figure out your income from all sources. It is important to be accurate and include only income that is "for sure," not what "might be."

If your income varies from month to month, figure an average monthly income. If the yearly estimated income from one source is $9,600, the average monthly income from that source is $800 ($9,600/12 months = $800/month).If there are times of the year when you don’t have any income, you need to save money for these times. Identify the months you expect less income and the months you expect more.

Step 2: Estimate Your Expenses

Use old bills, canceled checks, and receipts to help you estimate expenses.

There always are expenses you don’t expect–your car or bicycle breaks down, someone steals expensive textbooks, you get invited to a weekend skiing party. You may want to set up a special emergency fund or keep extra money in your savings account to pay for these things.

Some expenses, such as car insurance, holiday expenses and back-to-school clothes occur only once or twice a year. Know which months you incur these expenses. Figure the average monthly cost.

For example, if the car insurance bill is $750 for 6 months, the average monthly cost is $125 ($750/6 months = $125). Set aside $125 each month for this expense.

Can you make arrangements for monthly payments of expenses such as car insurance or property taxes? Think about expenses you can reduce.

Step 3: Make A Monthly Saving And Spending Plan

Now that you have estimated monthly income and expenses, you can make a saving/spending plan for each month. On a piece of paper, list the income available to spend this month.

Using your list of expenses, itemize the expenses that you will have this month. Look ahead to see what money must be set aside for future expenses. It’s okay if every penny isn’t budgeted. In fact it’s good to have some leeway for the unexpected.

Step 4: Keep Track Of Actual Income And Expenses

During the month, write down the income you actually receive and the money you spend.

Compare actual expenses to the plan you made in Step 3. If you overspend in one area, adjust the plan. For example, Stan’s phone bill this month is $70 rather than the usual $46. Can he reduce the cost of eating out? Should he try to reduce next month’s phone bill by making fewer long-distance calls?

If your plan isn’t perfect don’t be discouraged. It may need to be changed frequently because your activities are always changing.

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