# Spending plan: needs, wants and fun money > A spending plan that covers needs, saving and the things that make life good. - Course: [Personal Finance: Budget, Safety Cushion, Debt and Investing](https://productovi.com/courses/personal-finance.md) - Module: Where does my money go? - Lesson 2/32, ~18 min - Source: https://productovi.com/courses/personal-finance/spending-plan ## A plan, not a diet **Alex Tutor:** You're still helping Sam's family with their money. Sam is back, and the month's spending is sorted. **Sam:** Now I know where the money went. I want a plan that stops the shortfall. But I'm not living on buckwheat, and neither is my family. **Alex Tutor:** Nobody should. A **spending plan** isn't a diet: it decides in advance where each hryvnia goes, including the ones for fun. Start with the kind column in Sam's totals. **Dataset (CSV):** [Sam's pay cycle by category](https://productovi.com/datasets/personal-finance/spending-plan/sam-september-by-category.csv) 5 September to 4 October 2026, 62,858 UAH in total. Income: 31,000 + 25,000 = 56,000 UAH. - `category`: The bank's category - `kind`: essential or flexible - `total_uah`: Total for the cycle, UAH **Alex Tutor:** **Essentials**, your needs, are what you can't skip for a month without harm: rent, utilities, phone, kindergarten, groceries, transport, pharmacy, debt payments. **Flexible** spending, your wants, is everything you could change starting next month. **Sofia:** Groceries are essential, but 12,425 isn't a fixed number, is it? **Alex Tutor:** Right. Food is essential; how much and where you buy it isn't. The label says what can't drop to zero, not how big it has to be. **Sam:** And the installments? The washing machine and the laptop are already bought. **Alex Tutor:** That's why they're essential: a missed payment can mean fees and a damaged credit record. But they end. The washing machine has four payments left, the laptop six. > **Exercise:** Match each of Sam's categories with the reason it sits where it does in the plan. ## Needs vs wants: how big each part is **Alex Tutor:** Now compare each part with income, 56,000 UAH. Rent alone is 16,000 / 56,000 = 28.57%. **Sam:** I'd guess essentials are about half. The rest is where the money leaks. **Sofia:** The debt payments count as essentials too: 3,150 of installments plus 1,480 of card interest. **Alex Tutor:** 4,630 a month, yes. Now add up every essential line and check Sam's guess. > **Exercise:** Add up every **essential** category in Sam's totals. What share of the 56,000 UAH income do essentials take? Round to two decimals. **Sofia:** 76.67%, not half. And flexible is 19,923, another 35.58%. Together that's 112.25% of income. **Alex Tutor:** That's the whole story in one line: 42,935 + 19,923 = 62,858, which is 6,858 more than 56,000. The 300 left from the previous cycle softened it to the 6,558 we saw. **Sam:** So which part do we squeeze? **Alex Tutor:** Say the essentials stay as they are for now. How far would flexible spending have to fall for the cycle to cost no more than the income? > **Exercise:** Essentials stay at 42,935 UAH. By **how much** must flexible spending (19,923 UAH) fall so that the cycle costs no more than the 56,000 UAH income? ## Where to move money first **Sam:** 6,858 out of 19,923. That's a third of everything flexible. **Alex Tutor:** A third, 34.4%, not all of it. Flexible spending can change by next payday; rent can't. That's why a plan moves money from flexible first. **Alex Tutor:** Inside flexible, start with what Sam values least per hryvnia. Delivery on an exhausting Tuesday may be worth it; a taxi when the metro was fine, maybe not. Sam decides, not a rule. **Sofia:** So the essentials stay untouched? **Alex Tutor:** No, they're just slower. The card interest goes once the card is paid off, the installments end, groceries have room. That's months of work, not one payday. > **Exercise:** What is the **best first move** to close Sam's gap? ## Saving first, and money for fun **Sofia:** And saving? After all this, nothing is left to save. **Alex Tutor:** That's why saving goes first, not last. **Pay yourself first**: on payday, move a fixed sum to a separate account before any spending. Even 1,000. What's left at the end of a month is usually nothing. **Alex Tutor:** A popular rule of thumb splits income 50/30/20: essentials, flexible, saving. Sam's family is at 77/36 and minus 12. The split is a reference point, not a verdict: with rent and a small child, 50% may be out of reach for a while. **Sam:** So we cut all the fun until the card is clear? **Alex Tutor:** That plan tends to last about as long as your spreadsheet did. Cut everything, and the first bad week ends in a big order and guilt. Keep **fun money** for each adult: spent on anything, no questions asked. > **Exercise:** **True or false:** a good spending plan leaves no money for fun until every debt is paid off. ## Your turn: Sam's plan in one line **Sam:** Give me one line for the fridge: how much for essentials, how much saved, how much for everything else. **Sofia:** Essentials at their September level, a small saving on payday, and flexible gets what's left. **Alex Tutor:** Check that the three parts add up to exactly 56,000, and name the fun money inside flexible, so it's planned rather than stolen. **Alex Tutor:** The 6,558 already on the card is a debt question, and we'll get to it. For now, write Sam's line. > **Exercise:** Write Sam's monthly plan in one or two lines: amounts for essentials, saving and flexible spending (including fun money) that add up to the 56,000 UAH income. Add one sentence on where the flexible cut comes from. > **Key ideas** > > - **Essentials** can't be skipped for a month without harm; **flexible** spending can change by next payday. Sam's family: 42,935 UAH essentials (**76.67%** of income) and 19,923 flexible (35.58%). > - Together they are 112.25% of income: 6,858 UAH over, or 6,558 after the 300 left from the previous cycle. > - A plan has three parts that add up to income: essentials, saving (paid first, on payday) and flexible, including fun money. > - Move money from flexible first, starting with what gives the least per hryvnia. Essentials shrink too, but over months. > - Splits like 50/30/20 are a reference point, not a rule. A plan with no fun money rarely survives. **Alex Tutor:** Next time we look inside flexible for the leaks that hide best: subscriptions and small payments. - Previous lesson: [Tracking a month without a spreadsheet habit](https://productovi.com/courses/personal-finance/tracking-a-month.md) - Next lesson: [Subscriptions and small payments: the leaks](https://productovi.com/courses/personal-finance/subscriptions-and-small-payments.md) --- Productovi Learning. Free, no sign-up needed to read.