DEFINITION of 'Personal Spending Plan'

A document used to determine the cash flow of an individual or family. A personal spending plan, similar to a budget, helps outline where income is earned and expenses are incurred. When paired with a financial goals worksheet, the personal spending plan can be used to create a roadmap for monitoring spending, as well as helping determine the most appropriate methods for saving.

BREAKING DOWN 'Personal Spending Plan'

A personal spending plan is a different take on the traditional budget. While many people may be familiar with their sources of income, such as a salary from a job, fewer know the patterns associated with where that income is spent.

The personal spending plan is often more detailed than a standard budget because it requires more information about each item. By documenting and categorizing all sources of spending, individuals and families can better understand whether funds are being spent on items that detract from their ability to save for and reach their financial goals.

Financial goals are integral to making a personal spending plan work. Financial goals, such as saving money for a vacation, help individuals determine how much money should be diverted from living expenses into savings and investing. 

RELATED TERMS
  1. Personal Income

    Personal income is the total compensation received by an individual. ...
  2. Spending Phase

    The period in a person's life following retirement in which earning ...
  3. Savings Rate

    Savings rate is the percentage of money take from personal income ...
  4. Personal Equity Plan (PEP)

    A personal equity plan is an investment vehicle, created in the ...
  5. Financial Health

    The state of an individual's or a business's financial situation ...
  6. Administrative Budget

    A administrative budget focuses on the costs of running an operation ...
Related Articles
  1. Personal Finance

    5 Steps Toward Creating an Effective Budget

    Creating a budget can seem daunting, but it doesn't have to be. Use these five steps to create an effective budget you can live with.
  2. Financial Advisor

    10 Ways to Effectively Save for the Future

    Savings is as crucial as ever, as we deal with life changes and our needs for the future. Here are some essential steps to get started, now.
  3. Personal Finance

    How to Align Your Spending and Values

    Spending money is okay when it is aligned with what you value.
  4. Personal Finance

    4 Easy Techniques for Budgeting Money

    To be successful at creating and sticking to a budget, it’s helpful to have some tricks up your sleeve.
  5. Personal Finance

    Automatic Saving or Intentional Budgeting?

    While tracking expenses may work for some, automatic savings may work better for others.
  6. Personal Finance

    Can't Seem to Budget? Beat These 3 Challenges

    Budgeting challenges don’t have to keep you from getting your finances in shape. Just follow this plan.
  7. Personal Finance

    How To Stay On Track With Your Budget

    Sticking to a budget and making savings is the only way to put yourself on a firm financial footing.
RELATED FAQS
  1. How soon should I start saving for retirement?

    Learn about the basics of retirement planning and the reasons why it is so advantageous for individuals to start saving for ... Read Answer >>
Trading Center