When trying to identify and save a bit of extra money every month, there’s hardly a better way to accomplish your goal like making a spending plan. It’s one of the best ways to take a look at all of your income channels, where your money goes every month, and finding ways to cut back on unnecessary costs.
Here are four steps to help you get started with your own spending plan:
1. Take a Look at Your Income
Consider any and all paychecks you receive on a regular basis, and be sure to account for the taxes you have taken out and any payroll deductions you’ve agreed to. This will give you the amount of money you actually have to spend each month.
2. Add Up Expenses
This part is likely the most time consuming, but making a thorough list of all of your regular monthly expenses is the best way to get a clear picture of where your money is going.
Be sure to include:
- Regular large expenses like rent, utility bills, insurance, and car payments
- Food (including groceries and how much you usually spend eating out)
- Typical expenses for fun things like hobbies and entertainment (think movies, concerts, or sporting events)
3. Find the Difference
Subtract your monthly expenses from your income, and find an average for how much extra funds you’ll have every month.
If the number you came up with in step 3 is a bit low for your liking, it’s time to make some adjustments. Look at all of your expenses and find some to cut down on, like going to fewer concerts. This is the time to also consider putting that extra money toward a savings account, investments, or debt.
If you’d like to learn more about creating a personalized spending plan and budgeting, we’ll be featuring a class at Money School 2018 to answer all of your questions.
Money School is a FREE financial education day featuring workshops and one-on-one sessions to help you learn all you ever wanted to know about money. Register and choose your free classes here.