"The Spending Plan” – An Alternative to Budgeting

A clear and intentional approach to managing your money can bring greater clarity to both your day-to-day decisions and your long-term goals. Whether your financial life is relatively straightforward or becoming more complex, it is often worthwhile to revisit how your spending aligns with what matters most to you.

A spending plan is not about perfection. It is about developing a deeper understanding of your financial habits, preparing for the unexpected, and making more intentional choices over time. When approached thoughtfully, it can serve as a practical foundation for both stability and flexibility.

At 1919, that process begins with listening. We often start with two simple questions: Do you have a financial cushion for unexpected expenses? And do you have a clear framework for how you want to spend and save moving forward?

Planning for a “Rainy Day”

Bankrate’s 2026 Emergency Savings Report found that only 47% of Americans say they have enough available funds to cover a $1,000 emergency expense, underscoring how many households still feel financially stretched.¹

This emergency or “rainy day” fund is designed to help cover unplanned expenses, such as a job loss, medical costs, or major home or car repairs, without disrupting your broader financial strategy. The funds should be readily accessible and protected from market volatility. In today’s environment, where inflation and economic uncertainty can affect both expenses and income, maintaining accessible cash reserves can provide valuable flexibility and peace of mind.

How much should you save?

A common guideline is to maintain three to six months of essential living expenses in an emergency fund, providing a financial buffer during periods of uncertainty. This reserve is designed to cover essential needs, offering stability if your income is disrupted and allowing you time to adjust without making reactive financial decisions. While this range is a helpful starting point, the appropriate amount will vary depending on your circumstances.

For some, a more stable income, lower fixed expenses, or access to additional support may allow for a smaller reserve. For others, particularly households with a single income stream, variable compensation, or higher ongoing obligations, a larger cushion may be more appropriate. The goal is not to reach a specific number, but to build a level of financial flexibility that feels appropriate for your situation and provides confidence if your circumstances change.

As you think about risk more broadly, it can also be helpful to consider how your employer benefits and insurance coverage contribute to your overall financial safety net. Options such as disability insurance may help protect against certain risks that could affect your ability to earn income. However, not all risks can or should be insured, and finding the right balance between savings and protection is an important part of a thoughtful financial plan.

Where should you keep it?

When deciding where to keep your emergency fund, two priorities matter most: liquidity and stability. In other words, the money should be easy to access and should not fluctuate significantly in value.

We typically advise individuals to set up a separate account, and ideally, one that provides some interest without undue market risk. Some options include a high-yield savings account, cash management account, money market fund, or other cash-equivalent vehicle that provides liquidity while seeking to earn a modest level of income. This will allow you to earn a modest amount of income on your emergency fund while avoiding market risk. Money in these types of accounts is always available to you, and there is no issue if you need to withdraw it quickly to cover an unexpected expense. Keeping this money separate from your day-to-day checking account can also help reduce the temptation to spend it on routine purchases.

Creating a Spending Plan

Now that you’ve determined the right amount to have saved for a rainy day, you can begin to think about your spending plan. You work hard for the money you earn, so establishing a game plan for how you plan to spend that money is incredibly powerful. A useful starting point is the 50/30/20 framework, which divides your after-tax income into three broad categories: needs, wants, and savings.

50% for Needs

About 50% of your after-tax income should be spent on essentials, including:

• Housing
• Utilities
• Groceries
• Insurance
• Health care
• Transportation
• Minimum debt payments

If your essential expenses are taking up more than half of your income, it may be worth reviewing where adjustments are possible, especially because higher fixed expenses can limit your flexibility in other areas.

30% for Wants

The “wants” category covers discretionary spending, or purchases that are not strictly necessary but still add enjoyment and value to your life. This may include:

• Dining out
• Travel
• Entertainment
• Hobbies
• Clothing
• Event tickets

This category is often where greater awareness can make the biggest difference. We often advise clients to begin reviewing credit card and bank statements, whether in a spreadsheet or a digital budgeting tool, to categorize their spending. Creating a list of spending priorities for this category can be extremely helpful. Special events like weddings, holidays, and other family/friend occasions come up quite often, and they all have associated expenses. It’s always good to have a purposeful plan for handling your “wants”, whatever they may be.

20% for Savings and Future Goals

The remaining 20% can be directed toward savings and longer-term priorities, such as:

• Retirement contributions
• Debt reduction beyond minimum payments
• Other future financial goals

You will want to take advantage of any 401k match your company may offer, since this is essentially free money. Regardless of how you are saving your income, it is important to pay yourself first as part of thinking about your future.

How to Get Started

If it all sounds a bit daunting, don’t worry. Your team at 1919 is here to help you get started, and we have a few resources, such as our Personal Expenses Worksheet, that can help.

There are several digital tools available that can help track spending, monitor cash flow, and organize financial information. Whether you prefer technology, spreadsheets, or a simple pen and paper approach, the most effective system is often the one you will consistently use.

As you evaluate your spending, ask yourself a few simple questions:

• What are my essential monthly expenses?
• Am I spending in ways that reflect my priorities?
• Where could I create more flexibility?
• Am I consistently setting aside money for emergencies and long-term goals?

A spending plan does not need to be rigid to be effective. In fact, the most useful plans often evolve over time as your income, priorities, and life circumstances change.

A More Intentional Approach to Money

With the right spending plan in place, you can cover everyday expenses, prepare for the unexpected, save for the future, and still enjoy the life you are building today.

At 1919, we believe a thoughtful financial plan begins with understanding what matters most to you. A well-structured spending plan is one of the building blocks of a broader financial strategy. By aligning spending with your priorities, you can create greater flexibility today while remaining focused on your long-term financial goals.

FOOTNOTE

¹Bennett, Karen. “Bankrate’s 2026 Annual Emergency Savings Report.” Bankrate, Feb. 4, 2026,
https://www.bankrate.com/banking/savings/emergency-savings-report/.

About 1919 Investment Counsel
1919 Investment Counsel is a registered investment advisor. Its mission for more than 100 years has been to provide investment counsel and insight that helps families, individuals, and institutions achieve their financial goals. The firm is headquartered in Baltimore and has offices across the country in Birmingham, Cincinnati, New York, Philadelphia, San Francisco and Vero Beach. 1919 Investment Counsel seeks to consistently deliver an extraordinary client experience through its independent thinking, expertise and personalized service. To learn more, please visit our website at 1919ic.com.

Disclosures
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of 1919 Investment Counsel, LLC (“1919”). This material contains statements of opinion and belief. Any views expressed herein are those of 1919 as of the date indicated, are based on information available to 1919 as of such date, and are subject to change, without notice, based on market and other conditions. There is no guarantee that the trends discussed herein will continue, or that forward-looking statements and forecasts will materialize. This material has not been reviewed or endorsed by regulatory agencies. Third party information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

There is no guarantee that employees named herein will remain employed by 1919 for the duration of any investment advisory services agreement.

1919 Investment Counsel, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission. 1919 Investment Counsel, LLC, a subsidiary of Stifel Financial Corp., is a trademark in the United States. 1919 Investment Counsel, LLC, One South Street, Suite 2500, Baltimore, MD 21202. ©2026, 1919 Investment Counsel, LLC. MM-00002535