Creating a Personal Spending Plan

Managing your money is important. Students most often associate money management with creating a budget. However, the word “budget” can seem aversive and is often equated with enforcing restrictions on spending. Instead, you may want to consider making yourself a spending plan.

The difference between the two is subtle and, ultimately, is mostly about your mindset – a spending plan focuses more on making a plan for where you want to spend your money, rather than placing a limit on how much you can spend any given expense.

Unlike a budget, where you stop spending at all once you hit your set limit, a spending plan enables you to ensure you meet your financial priorities, then choose how you want to allocate the remainder of your income. A spending plan gives you more flexibility to spend money on things like entertainment, dining out, and travel.

Once you have met your priorities, the amount you have left can then be used at your discretion, as long as you do not spend beyond your means. While financial priorities will be different for everyone, some examples include:

  • Monthly obligations
    • Rent
    • Utilities
    • Insurance
    • Groceries
    • Transportation expenses (gas, car maintenance, bus/train pass, etc.)
    • Student loan payments
  • Savings for long-term goals
    • Long-term goals (e.g., vacation, buying a car, buying a house, etc.)
    • Emergency fund
  • Retirement fund
  • Investments
  • Charitable donations


To create your own personal spending plan, follow the steps below:

  1. Total your monthly expenses: make a list of each of the bills you have to pay each month (see “monthly obligations” above for examples) and, using your last few bank statements, other large categories of spending that may vary from month to month.
  2. Calculate your monthly take-home pay: look at your pay stub to determine your pay after taxes; include all sources of income, if you have multiple.
  3. Look at the difference between your take-home income and expenses: subtract your expenses from your monthly income to determine how much income you have left to allocate to the categories listed above and to non-essentials, such as entertainment.
  4. Create a list of your financial priorities: using the list above as an example, make a ranked list of the financial areas that are of greatest importance to you. Monthly obligations will come first, as they are non-negotiable; the rest is up to you.
  5. Set financial SMART goals: having created a list of your priorities, determine short- and long-term financial goals that will help you target your spending plan and adjust your spending habits when necessary. Be sure to set a deadline for completing your goal – this will allow you to calculate how much you need to allocate to this priority each month.
  6. Review and/or revise regularly: consider your spending plan to be a living document – meaning it should be flexible and may change over time according to your needs and current situation. On a quarterly basis (approximately every 3 months), take a look at your financial priorities and goals and modify your spending plan as needed.

There are a number of different methods for you to keep track of your spending plan. Some students choose to make their own customized spreadsheet (templates are available online to help you get started), while others prefer to use an app.

For additional personal finance tips, review this step-by-step guide. If you are struggling to manage your current debt and expenses, consider contacting a non-profit credit counselor (additional details can be found here).

By Alexandra Pierce
Alexandra Pierce Graduate Assistant, College to Career Transitions & Alumni Services Alexandra Pierce