A spending plan or budget is a plan for spending and saving family resources to meet identified goals.

What is the type of expense?

• Fixed expenses occur on a predetermined schedule and are for a set amount (such as a car payment or rent).

• Variable or flexible expenses usually occur on a predetermined schedule, but may change in amount (such as a cell phone or utility bill).

• Discretionary expenses are ones that are totally up to you (such as entertainment or eating out).

• Occasional expenses happen on an irregular basis and are often challenging to include in a budget. They require pre-planning, often for an entire year. Examples include quarterly insurance payments, an oil change, or an annual sports physical.

Organizing your cash flow

• Income – taxes – expenses = surplus or deficit

• A surplus is money that can be saved, used to pay down debt, or "put to work" toward some other goal.

• A deficit means you are spending more than you make; this often occurs when you use debt like credit cards for ordinary expenses. In this instance, it is necessary either to increase income or reduce debt.

Prioritizing Your Expenses

• Consider the consequences of avoiding that expense. What will be the results?

• Missing payments on housing, basic utilities, your auto loan, and other debt can result in penalties, foreclosure, repossession, shutoff notices, etc.

• Going out to eat, playing golf, and buying things you don't really need can probably be avoided when times are tough.