What is a spending plan? Definition, and how it differs from a budget

What a spending plan is

The CFPB's glossary defines a budget as a plan that outlines what money you expect to earn or receive, and says it is also called a spending plan. So the two words mean the same thing.

People like the second name because it sounds less like a limit. A budget can feel like a list of things you cannot do. A plan is something you made.

What goes in one

The CFPB's monthly budget tool uses three steps: list what you make, list what you spend and subtract. Before that, it says you need to track your income and expenses for at least one month so the numbers come from real life.

Your fixed expenses go in first because they are known. Then variable costs at their average. Then periodic costs spread across the year. Whatever is left is what you can save or spend freely, and that choice is the point.

A plan for two people

A couple's plan has a second job: it settles who pays for what before the month starts, so the money does not have to be argued over in the middle of it. Our guide to budgeting for couples covers the different ways to set that up.

A one-month spending plan

• Take-home from two biweekly paychecks: $2,093 + $2,093 = $4,186
• Fixed expenses: $1,790
• Groceries, gas and other variable costs: $1,300
• Fun money: $300
• Planned spending: $1,790 + $1,300 + $300 = $3,390
• Planned saving: $4,186 - $3,390 = $796