A Spending Plan gives you a framework for how and where to spend your money in order to achieve your goals and live your life in alignment with your values.

Want some background on how to create a Spending Plan? Read this post, which discusses:

• The top 2 reasons to create and follow a spending plan (one is definitely not what you think!);
• A step-by-step guide on how to make a personalized spending plan;
• Questions to ask yourself as you create your spending plan; and
• Tips and tricks for making a spending plan work for you.

---

 

In 2017, I plan to harness the power of a Spending Plan to pay off almost $32,000 in student loans while still having fun and enjoying my twenties! That leaves me with $850 per month for living expenses – which I’ve allocated in alignment with my goals and values as detailed below.

My 2017 Spending Plan is based off of both my 2016 Spending Plan and my actual 2016 spending + some educated guesses about additional expenditures due to changes in circumstances or new spending categories. I made sure that my Spending Plan categories align with my overall values – such as valuing experiences over objects.

Therefore, there’s literally one category in my Spending Plan called Enjoying Life and another called Objects. You can probably guess which category allows more spending. You guessed it, Enjoying Life is more than twice as large as Objects. I’ve also aligned my spending categories and my goals, short-term and long-term. For example, to maintain my health through physical activity, I’ve planned to spend a lot of money on Sports.

 

Start With a Goal

The most important thing to decide when creating your spending plan for the new year is what your overarching financial goals are. Do you want to save an emergency fund? Start investing in your 401k? Max out your retirement accounts? Save for a downpayment on your first rental property? Pay off all of your student loans? All of the above (OK, tiger)? You get the idea. The sky is the limit.

This goal will inspire you to stick to your spending plan, and it will drive you to figure out more creative ways to cut expenses in areas that aren’t important to you while increasing your earnings and savings rate.

This year, my huge goal is to pay off all of my remaining high interest student loans. 

Since November 2015, my student loan payment was always everything that was left over once my bills were paid. Once I pay off all of my high interest loans – hopefully in less than 2 years – this “leftover” money is going to be diverted towards my various saving goals.

This is one of the ways my Spending Plan really comes in handy – it gives me permission to spend a certain amount of money on things I want to – and any extra income I make can be put towards my student loans/emergency fund/vacation fund with no feeling of deprivation.

 

Tracking

I created a nifty spreadsheet (yes, I just used the word nifty to describe a spreadsheet… I’m a hopeless nerd) to store the categories and amounts, making tweaking it easy and checking progress a breeze. On a monthly basis, I review my finances using a program called You Need a Budget, fondly abbreviated YNAB. That’s when I pay my bills, evaluate my spending according to my Spending Plan, tweak the Spending Plan for the coming month(s), and determine my additional student loan payment.

On a quarterly basis, I check my progress with regards to my yearly allocation using my Spending Plan spreadsheet. Quarterly Spending Plan reviews to follow.

 

A Spending Plan is a guideline that helps you spend your money in accordance with your values.

 

2017 Spending Plan

 

Student Loans

Low Interest Loans Minimum Payment – $790.30

High Interest Loans Minimum Payment – $7,025.76

High Interest Loans Extra Payment – $24,000

Total Loans = $31,816.06

 

Savings Goals

Emergency Fund – $0

Tiny House – $0

Total Savings- $0

 

Expenses

Enjoying Life – $2,325

Experiential – $480

Sports – $905

Dates – Experiential – $240⁽¹⁾

Motorcycle – $500

Boat – $200

Food & Alcohol – $2,220

Dates – Dining – $240⁽¹⁾

Dates – Alcohol – $240⁽¹⁾

Dining – $180⁽¹⁾

Groceries – $1,440

Junk Food – $0⁽²⁾

Alcohol – $120⁽¹⁾

Business – $225

Blog – $120

Technological – $105

Automotive – $2,932

Fuel – $1,000

Maintenance – $504

Tolls/Parking – TIAIC⁽³⁾

Car Insurance – $1,428

Rent – $1,200

Home Improvement – $1,200

Objects – $1,010

Personal Care – $240

Household – Consumable – $180

Household – Non-Consumable – $240

Clothing – Necessary – $100

Clothing – Unnecessary – $50

Gadgets – $100

Gear – $100

Misc – TIAIC⁽³⁾

Health

Rewards

Charity/Donations

Gifts – $250

Work Expenses – Reimbursable

Work Expenses – Unreimbursable

Tax

Losses – TIAIC⁽³⁾

Loans

Slush (This is what I call money that I have spent in cash but I don’t know in what category)

Gambling

Shipping

Total Expenses = $10,162.00

 

Total Expenses + Loans = $41,978.06

 

Notes:

1. Things are listed as Dates – Category as well as simply Category (such as Dates – Dining and Dining) because my partner and I maintain separate finances but will often pay for each other’s dinner/trip/drinks/items. This is how I keep track of money I spend on myself and money I spend on myself + my partner. It helps me discern if overspending in certain categories is due to my habits or perhaps to activities that my partner and I participate in too often or too lavishly. Then I can determine how to adjust course to address these overspent areas.
2. Other categories I track my spending in, but don’t have a set amount allocated for. Categories without a set amount (or rather, an allocated amount of $0), such as Junk Food, Loans and Shipping are still included because I know that they are likely to be expenditures, however I want to limit them as much as possible. An integral part of this is not giving myself permission to spend money on them, while also being realistic about the fact that occasionally I will spend money on them.
3. TIAIC stands for Take It As It Comes. These categories I find extremely difficult (even using the previous year’s Spending Plan and spending data) to predict what my monthly and even yearly spending may be. These categories include Tolls/Parking, Health, and Charity/Donations, for example. Therefore, I decided to just roll with the punches, and evaluate monthly whether I think the amount I am spending is too much.

 

Final Thoughts

I am beyond excited to start implementing my spending plan for this year. It gives me the framework for crushing nearly 1/3 of my student loans, while also pursuing personal interests like getting my motorcycle and boat licenses, going on dates with my partner, and playing sports.

 

Your Turn:

What does your spending plan look like for this year? How much of your student loans are you planning to pay off?

 

P.S. Want to see if I stuck to my plan? Quarterly Reviews for 2017:

On a quarterly basis, I checked my progress with regards to my yearly allocation using my Spending Plan spreadsheet. These reviews are helpful for checking in periodically during the year to make sure I am on track. You can see the Quarterly reviews for 2017 here, and see where I did (and didn’t) meet the goals set out above!

• Q1 2017 Financial Review – $2,072 of Student Loans Paid Off
• Q2 2017 Financial Review – $21,500 of Student Loans Paid Off
• Q3 2017 Financial Review – $4k of Student Loans Paid Off + $5k Emergency Fund Saved
• Q4 2017 Financial Review – I saved $11,400 in 3 months!
• 2017 Review – $27k Student Loans Paid Off + 17k Saved + $950 Spent Per Month

 

WANT TO REMEMBER THIS? SAVE THIS PIN TO YOUR FAVORITE SPENDING PLAN PINTEREST BOARD!

 

 

 

 

SAVE for later on PINTEREST!