Not sure where your money is going? Let’s find out.
First, make a list of your fixed monthly expenses. (“Fixed” means the dollar amount is the same every month.) These include items like:
- mortgage/rent
- loans
- and insurance.
Utilities go under fixed expenses because they only vary by season. If you’re on a utility budget plan then you already know the amount. If your utility bills vary month to month, then add up the last 12 months and divide by 12 to get your average for each utility company.
Now, make a list of your variable expenses. (“Variable” means the dollar amount changes every month.) These include items like:
- your groceries
- entertainment
- auto/home maintenance
- gifts
- clothing
- and more.
The amount will vary each month, so get the average monthly expense for each item by adding up the last 12 months and dividing by 12.
Were you shocked by how much you spend and how you spend it? Most people are. We’re busy people and we like convenience, which means we tend to spend more than we should. Check back next week for Part 2 to find out what to do with this information.