What is a spending plan?

A spending plan is a method for distributing your income among the mix of things you want and need. Creating a spending plan ahead of time will allow you to effectively manage your finances and determine where to best spend your money.

What does a spending plan include?

A spending plan should include all of your money coming in, money going out, and money put towards savings. True, in addition to regular monthly payments such as rent and bills, a spending plan should also include irregular payments such as family trips, medical co-pays and deposits to savings.

What is a spending plan quizlet?

A spending plan is a tool to help people manage their money. It is used to help people track where their money is going, identify income and expenses, and meet financial goals.

Why are spending plans an important part?

A Spending Plan is an important part of financial planning because it helps you take control of your spending, and, therefore, control your financial future. By using a Spending Plan to help manage your money, you will be able to increase your net worth and reach your financial goals.

What is a spending plan in economics?

A spending plan is an informal document used to determine the cash flow of an individual or household. A personal spending plan, similar to one’s budget, helps outline where income is earned and where expenses are incurred.

What expense categories should be included in a spending plan for this rental?

The Essential Budget Categories

  • Housing (25-35 percent) …
  • Transportation (10-15 percent) …
  • Food (10-15 percent) …
  • Utilities (5-10 percent) …
  • Insurance (10-25 percent) …
  • Medical & Healthcare (5-10 percent) …
  • Saving, Investing, & Debt Payments (10-20 percent)


Which is a spending plan that tracks all sources of income and expenses during a set period of time?

What Is a Budget? A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money.

How do you make a spending plan?

You can create your spending plan in four steps: List your income. List your expenses. Compare your income and expenses.



  1. Step 1: List Your Income. …
  2. Step 2: List Your Expenses. …
  3. Step 3: Calculate Your Cash Flow — Compare Monthly Income and Expenses. …
  4. Step 4: Find Resources and Make Changes — Increase Income or Reduce Expenses.


What is personal spending example?

Loans (student loans, car loans, home equity loans) Insurance (car insurance, health insurance, life insurance) Daycare. Tuition.

What is importance of making a spending plan for a family?

Budgeting can help you and your family take the first step towards control of your money. It can also help you avoid debt. And it lets you get on with enjoying family life, rather than spending too much time worrying about your finances.

What are the 5 categories of spending?

Recommended Budgeting Categories

  • Mortgage or rent.
  • Property taxes.
  • Household repairs.
  • HOA fees.


How does the IRS know if I have rental income?

Ways the IRS can find out about rental income include routing tax audits, real estate paperwork and public records, and information from a whistleblower. Investors who don’t report rental income may be subject to accuracy-related penalties, civil fraud penalties, and possible criminal charges.

What are the 4 types of expenses?

Terms in this set (4)

  • Variable expenses. Expenses that vary from month to month (electriticy, gas, groceries, clothing).
  • Fixed expenses. Expenses that remain the same from month to month(rent, cable bill, car payment)
  • Intermittent expenses. …
  • Discretionary (non-essential) expenses.


What are the 5 steps of a spending plan?

5 Steps to Creating a Budget

  • Step 1: Determine Your Income. This amount should be your monthly take-home pay after taxes and other deductions. …
  • Step 2: Determine Your Expenses. …
  • Step 3: Choose Your Budget Plan. …
  • Step 4: Adjust Your Habits. …
  • Step 5: Live the Plan.


What are three benefits in having a spending plan?

A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home. Overall, a budget puts a person on stronger financial footing for both the day-to-day and the long term.

What are 3 steps in establishing a spending plan?

Budgeting Steps – 3 Easy Tips for Making a Budget That Works

  1. Tips for Better Budgeting. Whichever method or tools you use to develop a budget, these three steps are always the same. …
  2. Step 1 – Determine Monthly Income. …
  3. Step 2 – Identify High-Priority Bills. …
  4. Step 3 – Estimate Other Expenses. …
  5. A Note About Discretionary Spending.


Is the process of creating a plan to spend your money quizlet?

What is budgeting? Budgeting is the short process if creating a plan to spend your money.

What is the biggest difference between a bank and a credit union quizlet?

Banks are for profit, owned by it’s investors and paid; board of directors runs the bank. FDIC(Federal Deposit Insurance Corporation) insures customers money if bank goes out of business. Money up to 250,000. Credit Unions are NON profit, owned by it’s members.

What is the most common budgeting mistake?

One of the biggest budgeting mistakes to avoid is being unrealistic about your spending. Under-budgeting in some or all of your spending categories may leave you with less money than you need to allocate toward your needs.

What is one benefit of a budget?

A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home.

What should you do before creating a spending plan?

You can create your spending plan in four steps: List your income. List your expenses. Compare your income and expenses.



  1. Step 1: List Your Income. …
  2. Step 2: List Your Expenses. …
  3. Step 3: Calculate Your Cash Flow — Compare Monthly Income and Expenses. …
  4. Step 4: Find Resources and Make Changes — Increase Income or Reduce Expenses.


How do you spend money wisely?

7 Tips For Spending Money Wisely

  1. Track Your Finances. …
  2. Think About the Long-Term Benefits and Drawbacks of Purchases. …
  3. Only Put Money on Your Credit Card if You Can Afford to Pay it off Each Month. …
  4. Stop Trying to Impress Other People. …
  5. Figure out What Habits Drain Your Budget. …
  6. Learn to Value Savings Over Products.