Step #5 – Setting Up Your Monthly Spending Plan
So…you know where you are, you know what you owe and you know what you have available, right?! Here’s the next step. This is where you will really start seeing some things come together and where there is work to be done.
Your Monthly Spending Plan is where you will “spend” all of your money on paper. You will allocate amounts to where they need to be or where you want them to go. Trust me…money will go regardless of where you would “like” it to go if you don’t set up a plan! So…get your tools back out!
At the top of the page, enter the amount of monthly income your household receives. If this varies due to you being hourly or on a commission plan, use the low average amount of income. This is how much money you have to allocate.
Next, down the left hand column, list all of your expenses – your monthly bills, gas, groceries, etc. Don’t forget to have a listing for savings! This can be general savings at this point unless you are ahead of the game and want to get more specific – emergency savings, long term, vacation, etc. Be sure to include items like car maintenance, medical expenses and such as well. Remember, it doesn’t have to be perfect at this point as you will be tweaking it! It does have to balance, though!!
To the right of each item/category, place the allocated amount of income needed. If you are unsure, use the average of the last few months. At the end of this exercise, you should come up with ZERO unallocated income!
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