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Your Saving/Spending Plan EC 1270 Reprinted October 1992 A.M. Morrow and L. Schwartz Do you want to print a copy? We recommend downloading the print version (120 K). First download the free Adobe Reader, if you don't already have it. A saving/spending plan won't just help you make ends meet. Where you do have spending choices, it will help your family get the most satisfaction. It will help you save for emergencies and plan ahead for big expenses. You'll have more control over your life, more peace of mind. There is no one "right" saving/spending plan. Families have different goals and face different situations. But any family can follow these steps to make a saving/spending plan: Estimate your income. Estimate your expenses. Make a monthly saving/spending plan. Keep track of actual income and expenses. Think of ways you can stay in control of your money. Which of these might work for you? Pay all bills the day money arrives. Buy all necessities the day you get money. Have all the bills in one place, ready to pay when the time comes. Have a list of all the things you plan to buy this month and know about how much you can pay for each. Grocery shop once a week or every two weeks. Budget and spend a set amount of grocery money for a 1- or 2-week period. Decide who is responsible for handling the family money. Involve the whole family. Step 1: Estimate your income The first step in making a saving/spending plan is to figure out the income of all family members. It is important to be accurate and include only income that is "for sure," not what "might be." If your income varies from month to month, figure average monthly income. If the yearly estimated income from one source is $9,600, the average monthly income is $800 ($9,600/12 months = $800/month). If there are times of the year when you don't have any income, you need to save money for these times. Know which months you expect less income and which you expect more. Income for the month of ____________________ Income  Amount Job/self employment  ___________________ Job/self employment  ___________________ Overtime and part-time work  ___________________ Alimony and child support  ___________________ Social Security  ___________________ Veteran's benefits  ___________________ Worker's Compensation  ___________________ Food stamps, WIC and AFDC  ___________________ Unemployment insurance  ___________________ Other  ___________________ Total income this month  ___________________ To convert weekly income to monthly income, multiply weekly income by 4.33. Step 2: Estimate your expenses Use old bills, cancelled checks, and receipts to help you estimate expenses. There always are expenses you don't expect--auto repairs, dental and medical bills, and appliance repairs, for example. You may want to set up a special emergency fund or keep extra money in your regular savings to pay for these things. Some expenses, such as car insurance, holiday expenses, back-to-school clothes, and property taxes, occur only once or twice a year. Know which months you have these expenses. Figure the average monthly cost. For example, if the car insurance bill is $240 for 6 months, the average monthly cost is $40 ($240/6 months = $40). Set aside $40 each month for this expense. Can you make arrangements for monthly payments of expenses such as car insurance or property taxes? Look at loan payments. When will a loan be completely paid? When it is paid, consider saving some of the money that you used to set aside for the payments. Think about expenses you can reduce. Change this list of expenses to fit your family's needs. If you have expenses not listed here, write them in. Expenses for the month of ____________________ Expense Amount Rent or mortgage _________________ House and auto insurance _________________ Property taxes _________________ Federal/Oregon income taxes _________________ Electricity and gas  _________________ Water and sewer _________________ Telephone  _________________ Cable TV  _________________ Child care _________________ Life and health insurance _________________ Loan payments For car For furniture and appliances For other items    __________________ __________________ __________________ Food at home  _________________ Food away from home  _________________ Clothing _________________ Transportation (gas, auto parts and repair, bus fare)  _________________ Contributions  _________________ Personal care  _________________ Medical/dental  _________________ Recreation  _________________ Household supplies _________________ Educational expenses _________________ Other _________________ Savings _________________ Total expenses this month _________________ Step 3: Make a monthly saving/spending plan Now that you have estimated monthly income and expenses, you can make a saving/spending plan each month. On a piece of paper, list the income available to spend this month. Using your list of expenses (Step 2), itemize the expenses that you will have this month. Look ahead to see what money must be set aside for future expenses. It's okay if every penny isn't budgeted. In fact it's good to have some leeway for the unexpected. In their October plan, Stan and Rosemary listed the paycheck Stan receives the end of September and the money Rosemary earns each week caring for the neighbor's children. They set aside money toward property tax due in November and auto insurance due in January. Rosemary hopes they can set aside money for the holidays. Stan and Rosemary will keep track of all their October expenses (Step 4) so that they will be able to make a more accurate and complete plan for November. Stan and Rosemary—October       Income     Stan's net pay, rec'd Sept. 30   $921.42 Rosemary's pay ($50 rec'd Oct 7, 14, 21, 28)   $200.00 Total Income   $1,121.42       Savings   $50 (emergency fund)       Expenses     Mortgage   232.00 (due on 5th) Electricity   50.00 (due on 5th) Telephone   17.00 (due on 5th) Cable TV   15.00 (due on 5th) Food at home   300.00 Stan's lunches   80.00 Clothing   30.00 (shoes for baby) Gas for car   40.00 Medical   15.00 (baby's prescription) Household supplies   15.00 Set-aside for prop. tax   100.00 (pay in 3 installments of $400.00; due Nov., Feb., May) Set-aside for auto insurance   50.00 (ins. premium due in Jan.—$284 for 6 mos.) Total Expenses   994.00       Income   $1,121.42 - Savings/Expenses   - 994.00     +127.42 (unbudgeted) Step 4: Keep track of actual income and expenses During the month write down the income you actually receive and the money you spend. Make one household member responsible for recording how much money the household spends. Everyone needs to cooperate by telling the recordkeeper how much they spend. Compare actual expenses to the plan you made in Step 3. If you overspend in one area, adjust the plan. For example, Rosemary and Stan's phone bill comes and it is $27.00 rather than $17.00. Can they reduce the cost of household supplies? Should they try to reduce next month's phone bill by making fewer long distance calls? If your plan isn't perfect, don't be discouraged. It may need to be changed often because your family's activities are always changing. Prepared by Alice Mills Morrow, family economics specialist, Extension home economics, and Lisa Schwartz, assistant program administrator, Extension energy, Oregon State University. Reprinted October 1992.

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