Budget or Spending Plan?

by anne on August 25, 2006

spending planI don’t know about you, but the word budget conjures up visions of constriction and rigidity. On the other had, spending plan sounds gentle and expansive. So I don’t budget, I create spending plans. Okay, I’ll admit, this is, at least in part, a mind game, but why not? After all, it’s my mind that deals with money. So if using spending plan helps keep me on track, I’m totally comfortable with throwing out the word budget.

How Does a Spending Plan Differ From a Budget?

There actually is a difference. A spending plan allows me to plan how I’ll spend the money I’ve got. A budget, or so it seems to me, insists I spend money only in pre-specified ways. For example, I have allotted myself $25 to spend each month on clothes. Not much, I’ll admit, but more than I’ve often allowed myself in the past. So there it sits, the possibility of spending $25 on clothes. For me, that money accumulates. This month I actually spent just over $30, and I spent it confidently, knowing I hadn’t spend any on clothes last month. Another example – I know my spending plan calls for $60 a week in groceries – that’s food, not the self-care items we so often buy at grocery stores or the books and magazines I’m wont to pick up there. Walking into Trader Joes, I know how much I’ve got to spend this week. I don’t have to guess. It makes shopping so much easier.

If I Go Over?

Another thing I like about a spending plan is it’s a plan, not an absolute. If I go over my plan in one area, I don’t beat myself up the way I might if I were on a budget. After all, it’s just a plan and we all know plans change. But knowing I’ve gone over my planned amount brings some clarity to how I’m choosing to spend my money. And it is always a choice. Spending plans make it much easier for me to be conscious of the choices I’m making. What’s really surprising to me, is by making a spending plan each month, I’m much less likely to overspend. In fact, I often spend a bit less than I’d planned, which is also a good feeling. It really is all about getting out of vagueness and into clarity.

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{ 1 comment }

Gail Shaw September 17, 2006 at 8:15 pm

Hi – I like the idea of having the spending plan and allotting so much to each item and what is left over – can be spent later on or if overspent – spend less the next week or month. Makes sense to this loosehead.

Many thanks.

Gail S. Fremantle, Western Australia

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