Organize your finances with a focused spending plan method

focused spending plan

Learn how to get the most out of your money with the focused spending plan.

If you suspect you have a hole in your wallet through which money just falls out, you are not alone. Most of the people don’t have any kind of spending plan in place, and some time ago myself included. They just kind of wing it from paycheck to paycheck. And always wonder where on earth did their money go. I was one of those people, I didn’t want to be controlled by the budget. What a wrong way of thinking that was. Having a budget gives you control. And having a focused spending plan gives you not only control of your current finances but also opportunities to pursue your passions.

What is a focused spending plan?

Focused spending plan is a method of determining where your money will go so that you always have enough for what really matters to you. It’s named focused because it focuses on your unique situation and priorities. It is created by you and for you.

Instead of creating a traditional budget where you allocate portions of your income towards categorized expenses. You will be creating a plan that goes well beyond the usual budget template. You will create a spending plan that revolves around your priorities. This will result in a complete change of your spending habits and ultimately your lifestyle.

Having a plan for your money means it will never happen that you don’t have enough to finance your living and your goals. With a focused spending plan you will always have a clear picture of where you are and where you want to be.

Why should you create a focused spending plan?

Focused spending plan is tailored to your specific needs. It helps you stay on top of your finances and always have enough for what is important to you. Having this kind of plan will help to keep you focused on your priorities and life goals.

Following the spending plan you create for yourself will enable you to always have enough to finance your goals.

Through the process of creating the plan you will learn your spending patterns. They will show you exactly where your hard earned money has been going. You will find out where you’ve been wasting your money so that you can change your spending patterns in order to use your money for what really matters to you.

How to create a focused spending plan?

1.Track your expenses for 3 months

To create a spending plan tailored to your specific needs first you must know what are your current spending habits. Start by tracking your expenses. For this you can use a budgeting app , spreadsheet or paper and pen. Track your expenses as detailed as possible. Record every purchase, no matter how small and try to add as much detail as possible (details like what, when and why you bought). The more details you have easier it will be to pinpoint where your money is being wasted.

Divide expenses in these categories and add or take away categories to fit your situation and needs.

Essential expenses

These are your basic living expenses divided in fixed and variable expenses. Fixed are the ones that cost you the same every month and variable ones are those on which you (mainly) have influence.

Fixed expenses

    • Housing (rent / property fees and taxes / mortgage)
    • Insurances
    • Internet
    • Phone
    • Emergency fund

Variable expenses

    • Bills
    • Groceries
    • Transport
    • Medical / healthcare
    • Unexpected emergency expenses

Non-essential expenses

This is where your money is slipping away and this is the area you will need to work on the most. But we’ll get into that later. For the next 3 months, spend as you usually would, so you get the clear picture of a real situation.

Here are listed basic categories, but you should add or take away categories to fit your needs.

    • Clothing
    • Cable / streaming service
    • Eating out
    • Entertainment
    • Hobbies
    • Travel

2.Evaluate your expenses

After 3 months of meticulous tracking of every purchase it’s time to evaluate. To do that start by calculating the average of total expenses for each category. Except fixed expenses of course, since they are always the same.

(category_month1 + category_month2 + category_month3) / 3 = category_average

When you’ve calculated the average for each category, take a good look at it, notice the distribution across different categories. 

Where does most of your money go? Are you ok with that or you think it should be different?

Do you spend too much on a particular category that you think should be less?

When you find a category on which you want to work on to lower the total amount, take out all purchase details for that category. Question every purchase. Was it money well spent or was it a complete waste? Was it an impulse buy? If you are not satisfied with that purchase write down the amount and add to it all other unsatisfactory purchases. When you finish, take a look at the amount. That is how much you would have now on your account if you haven’t made those financial decisions. Now repeat this for every category you want to improve. Mark down these amounts as category_wasted.

When you’re done you will get a clear picture of where your money goes and where lay your opportunities.

3.Get your moneys’ worth best practices

Why would you pay more for something that is worth much less?

On a lot of expenses you can influence. Some prices can be lowered with a little bit of negotiation. 

Internet and phone tariffs are often overpriced and you should always try to pay the lowest possible price.

Same goes for insurances. 

Bills are a variable expense on which you can save if you shop around and look for the lowest possible price.

Groceries are a big category on which you can save if you track sales and buy in bulk. Larger packages almost always cost 20% (or more) less than the same product in a smaller package. Meal planning and buying exactly as much as you need will significantly lower your grocery bill.

On clothing you can save very much if you keep it simple and buy off season when there are huge sales.

Cable is in my opinion a waste of money and time. Rather get a streaming subscription.

Eating out daily (including coffee to go, pastries…) is a really spendy behavior. It’s very bad for your wallet as well as your health. Making your own meals is a much cheaper and healthier option.

4.Set your priorities

Set your priorities and carve them into stone. 

Make a list of your financial goals and put them on a scale of importance. This is the backbone of your focused spending plan.

Your financial goals can be anything from paying off debt, saving up for early retirement, buying a house to funding your hobbies and passions.

For every goal, set the exact amount you need in order to meet that goal. If it’s a recurring or timeless goal like a hobby or travel, set the monthly amount you need or would like to have.

Somewhere on this list should also be an emergency fund. For me that is an essential fixed expense. And I strongly urge you if you don’t have one yet, it’s high time to start funding it. Ideally you should have 6-12 months worth of expenses saved up. And keep it in a high-yield savings account to earn some interests over time. Life is too unpredictable and this is your safety net in case the unexpected happens.

5.Create your focused spending plan

First eliminate what’s unnecessary by going through all your expense categories and applying the get your moneys’ worth best practices wherever you can. If you do this thoroughly you will have on disposal much more of your income than before.

Next go over your evaluation results. For every category you wish to spend less on do this calculation category_average – category_wasted = category_allowance.

This is your ideal limit for that category. This is the amount you will strive not to cross so that you can have more for what is high on your priority list. 

Take your income and from it subtract a total amount of essential fixed expenses. From the amount you get, subtract the total amount of average values of essential variable expenses. That would be category_average or category_allowance for every category under essential variable expenses. 

What you are left with is the amount of money you have for your goals and non-essential expenses. Plan for monthly spendings of this money with priorities in mind. Redistribute your finances by taking into account all those amounts you set for financial goals. Always try to get as close to a desired amount as you can. And let that be your motivator to rethink every non-essential purchase.

Tips for keeping up with your focused spending plan

Every purchase you make is a financial decision

It doesn’t matter how small the price of an item if it’s not something you really need. As you may have realized by now, small amounts over time build up to large sums of money. If you want to be in control of your money you must use it wisely and think of every purchase as a financial decision it is.

Answer these questions before every purchase

Do I need this or do I want this?

Is this an emotional buy?

Is this adding value to my life?

Will I regret buying this later on?

Is there a cheaper option?

Know the difference between wants and needs

Needs are essentials for living like food, water, a safe place to live, clothing. Everything else is a want and that is where you must prioritize. Which wants are more important to you and which ones are not.

Try a 24-hour rule 

Before making a big purchase wait 24 hours. Set an amount from which every purchase is considered big, and follow this rule every time the cost of a purchase exceeds that amount. In that time rethink your decision, maybe you already have something similar or you can find a better price or maybe you really don’t need it. To help you decide answer these questions:

Is this my priority?

Is there a return policy in case I will want to return it?

Will I still want it 6 months from now?

Will there be more costs to maintain this item down the road?

Can I afford it?

On what else could I spend this amount?

Do a no-spend challenge

Choose a period of time when you will spend no money. That may be weekend or, a whole week once a month. Or maybe a period of the day, say after 5 no more buying. Stick to your challenge even if you encounter a difficulty (unless it’s a medical emergency), try thinking outside the box and getting creative.

Educate yourself financially

Make a habit to read a book on finances at least once a month. Finances are an important area and you should learn as much as possible about it.


Focused spending plan method completely changed my finances and my life. It helped me to get the most out of my money. And with focus and dedication it can do the same to you too.

It’s never too early or too late, and you can never be too rich or too poor, to start planning your finances.


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