Establish and Manage Your Budget

With regards to personal finance and your fiscal health, establishing a budget is a good place to start. Before moving forward, I should note that I have recently started using the term ‘spending plan’ vice budget and I sometimes use them interchangeably as they refer to the same action.

However, for many, ‘budget’ has many negative connotations, representing constraints and speaks to what you will not, or cannot, do. Conversely, a spending plan, is viewed more favorably, in a more positive light, as it speaks to what your values and goals are; and how money should flow in and out of the home.

A spending plan is an Spending Planeffective tool for controlling debt and serves as a financial guide. It lets you know if you are heading in the right direction and are on track to reach financial goals such as buying a home, sending a child to college, or preparing for retirement. In addition to being an effective financial guide, a spending plan allows you to measure your progress on a regular basis and implement changes as necessary.

The first step in establishing a spending plan is to track your expenses over a given time period; three to four months at a minimum. Doing so will reveal two critical pieces of information: your total expenses relative to your income and your current income allocation. With that information in hand, you are ready to gain control of your financial life.

The RWR Spending Planner – part of the RWR Simple Retirement Workbook – is available as a free download. Ideally, your income will exceed your expenses. If not, you should consider ways to generate more income and/or determine how you can reduce expenses. Once you have achieved a positive monthly status, you can look more closely at your current allocation.


Are you allocating enough money to areas such as savings or retirement accounts, and other vehicles that will help you reach your financial goals? If not, your spending plan will help identify the areas (e.g. entertainment, clothing, transportation) where you might be able to reduce expenses, making a shift to more desirable areas.

Integration of Strengths [TramueL]

As you might imagine, managing your spending plan is not a once and done proposition; it is a very dynamic process that will change over time as your income changes, your debt is reduced, and numerous other factors. Therefore, you must be prepared to monitor your spending plan, and adjust as necessary, on a regular basis, continually looking for ways to reduce expenses and ensure that you are on track to reach your financial goals.

What tool(s) do you use to manage your spending plan?

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. I love the idea of calling our budget a spending plan. It does have a positive connotation to it! We use a simple ledger book. It’s pretty fun because we can easily look back to see how our finances used to line up all the way back to 1988 😮

    • 1988! Nice. Tracking your expenses is key to knowing where your money is going and how it can be more effectively managed. Thanks for stopping by, Jayleen.

  2. My spreadsheet looks a little similar to this, I have columns for actual and budget for each area of spending in case I’m not sure of the exact amount. Yours looks a lot clearer than mine though! I have tried a couple of apps, but for some reason, I go back to Excel every time!

    • What is illustrated is really just the basic spreadsheet for tracking expenses, made available with my book. My personnel ‘financial spreadsheet’ which was developed/modified over a number of years is an Excel Workbook with multiple worksheets. Worksheets include a budget sheet (I prefer the term ‘spending plan’), a portfolio sheet, a computations sheet (comprised of the calculations [formulas] for Social Security benefits and defined benefit pensions) as well as a few more, such as a sheet that outlines beneficiaries and their inheritances from various accounts. Of course, where relevant, calculations from one sheet feed others.

      As an example, my brother will receive 30% of my TSP – 401(k) equivalent – account upon my death. As the numbers on the portfolio sheet change, there is a corresponding change on the beneficiaries sheet.

      At the end of the day, the workbook allows me to see not only what is happening (on a daily basis if desired) but also to manipulate the numbers (e.g. interest rates, retirement formulas, inflation, etc.) to see what kind of impacts will be felt across my entire financial portfolio should certain conditions occur. The advantage, as I’m sure you have found, in using a personally developed spreadsheet is that you can build it manage it, and view it on your terms, in ways that make sense to you.

      Thanks for taking the time to stop by, Hayley.

  3. I followed your recommendations in Rendezvous With Retirement and created a budget. I track everything I spend, even that $1.00 I gave the kid selling chocolate for his school. There are a few apps that I use that I’ve found to be very useful to keep track and categorize my spending. My favorite is Wave designed for business but has free personal finance software. Track income, expenses and investments. It also features a receipt scanner.

    • It really does start with tracking expenses to understand how your income is being distributed and then making adjustments over time to decrease expenses where possible so that you can increase savings and investments. I will have to check out Wave. Thanks for stopping by and adding to the conversation, Brian.

  4. Excel is so easy to use and makes budgeting a lot easier. As I came up through life, I used a small notebook or wrote everything out on a piece of paper and put it on the fridge so I would see it each time I walked by. This drilled it into my brain. Growing up poor and suddenly getting a job and having money, you want to spend to get all the things that you never had. That was a hard lesson learned, especially with credit cards, that you “can’t always get what you want, you get what you need!” Having a budget helped me out when I was younger for sure. I would HIGHLY recommend it to EVERYONE.

    • Being able to see how your money is being spent goes a long way to making changes to spending habits. And you are correct, Excel is easy to use and makes managing a budget very easy. There really isn’t a need for complicated, expensive software.

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