Many families set goals and have dreams for the future. Taking charge of spending means knowing how much is being spent and on what items.
A good recordkeeping system can make all the difference in making your spending plan a success. You might want to consider the following methods to achieve a realistic idea of how your money is being spent:
■ Bill Pay Checklist: This can be used to help keep track of bills. The checklist will help you sort through all your monthly bills by keeping track of the due dates and the exact amount due for each bill. (FE222c)
■ Expense Tracker: Write down your daily spending for a one-month period. Make note of the budget category for each expense. Track categories that vary in amounts from week to week or month to month. You do not need to track fixed expenses such as a mortgage or car payment. (See FE222d)
You have many ways in which you can budget your monthly expenses. Below are a few examples:
■ Spending Plan Worksheet: With this worksheet, you will separate your family living expenses into fixed, flexible and occasional expenses.
- Fixed expenses are expenses that you pay every month and the amount does not change. They include things such as mortgage/rent, installment credit and insurance.
- Flexible expenses include those you pay every month but the amount changes. Examples of flexible expenses include groceries, gas, utilities and entertainment.
- Occasional expenses are those that do not occur every month. Don’t forget to come up with a list of these occasional expenses so they don’t throw your monthly spending off. (See FE222e)
■ Paycheck Budget: This budget method involves creating a spending plan for each paycheck you receive. You start with documenting how much net income you received on your paycheck and then you document each expense that paycheck will go toward. (See FE222f)
■ Calendar Budget: Use a calendar to track your monthly cash flow. Begin on the first day by writing down cash on hand or the balance in your checking account. Write your paycheck amounts on the appropriate dates. Then write down when bills need to be paid or when you need to spend money for food, gasoline, school, etc. You will list the amount of your income and the bills so you can add and subtract as you progress. Continue this process through the month to see if you can cash flow. (See FE222g)
■ 50/30/20 Budget: This budget type is based on using different percentages of your income on specific expense categories. The idea is to spend 50% of your income on needs such as housing and groceries, 30% on wants such as entertainment and 20% goes into savings. (See FE222h)
■ Technology: Using technology to help with budgeting also is an option. Many websites and apps are available to choose from if you want to go this route. Only use trusted reliable sources, especially when it involves entering any personal information. Some banks also have their own app to track expenses that pulls information directly from your account, so you can ask your bank if this is an option.
