Creating A Spending Plan 101
February 17, 2026
Do you have too much month left at the end of your money every paycheck? You’re not alone. About 67% of Americans live paycheck to paycheck in 2025, and around 30% are spending more than they make. Life can be expensive, and all the big and little costs can eat up what you bring home. How does anyone manage to pay down debt or save for retirement?
You need a budget to balance your income with your spending so you can have enough left over to meet your savings goals. When totaling up your income, be sure to include all of it. Besides your own, there may be additional income from a spouse, a part-time job or freelance work, or rental income and royalties. Keep track of everything you spend during the month, and don’t overlook expenses that only get paid once or twice a year, like holiday gifts and insurance invoices. You can either write it down, or use an online budgeting tool—there are a number of different ones available. Some people even use an Excel spreadsheet.
Organize your expenses into fixed, flexible, and financial goals. Every month, pay yourself first. Make sure you are putting at least some money toward your financial goals and meeting your fixed, predictable costs like housing, car or debt payments first. Then, what is left can go towards flexible expenses that can vary from month to month, such as groceries, utilities, transportation, and entertainment costs.
Many people like to use the simple budgeting method of allotting 20% of income to saving for financial goals such as retirement or the down payment for a house, 50% to fixed expenses, and 30% to flexible expenses. It’s important to include some money in your budget for things and activities you enjoy, which makes it easier to stick to your spending plan.
The primary benefit of having a spending plan is that your income covers all your expenses, with money left over at the end of the month. Flexible expenses are where you can usually see the biggest savings by using coupons, taking advantage of sales, and adjusting your thermostat by a degree or two. Paying all your monthly bills without resorting to credit cards is a necessary step toward being able to meet your longer-term financial goals.
Tips for Managing Your Spending
First, set aside what you need to pay your fixed expenses and what you want to put towards your financial goals. You might set up automatic bill payments for recurring monthly expenses—you’ll never miss a payment and can avoid late payment charges. When you travel or make online purchases, use a credit rather than a debit card because credit cards offer fraud protection plus the ability to dispute a charge, if necessary. Just be sure you can pay it in full at the end of every month. Some cards offer cash or travel rewards. As long as you’re paying off the balance every month, using a credit card for everyday expenses can put a little money back in your pocket.
If you’re consistently having trouble making ends meet, there are only two things to do: cut back on your spending, or look for ways to earn additional income. There’s a limit to how often you can eat ramen noodles for dinner, but there’s no limit to how much you can earn. Take on a seasonal job, or start a small solo business on the side to make extra money to spend or put towards your longer-term financial goals.
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