Creating a spending plan is essential to being a good steward of your resources and to reach your financial goals. Now that you have reviewed 4 months of expenses you have a good idea of what you are spending each month. Let’s begin with the categories and recommended percentages to use as guidelines in setting up your plan. You should be able to copy and paste the graphic to a Word document and print it in order to use it. If you have trouble doing that, email me and I will send you a copy.
Net Monthly Income_________$________________Use an average if your income varies
| CATEGORY | TARGET AMOUNT | ACTUAL EXPENDITURE | DIFFERENCE +/- |
| Charitable Giving – 10% | _____________ | ________________ | ______________ |
| Savings – 10% |
_____________ | ________________ | ______________ |
| Housing – 25% | _____________ | ________________ | ____________ |
| Utilities – 5% | _____________ | ________________ | ____________ |
| Food – 5% | _____________ | ________________ | ____________ |
| Transportation – 5% | _____________ | ________________ | ____________ |
| Clothes – 5% | _____________ | ________________ | ____________ |
| Medical/Health – 5% | _____________ | ________________ | ____________ |
| Insurance – 10% | _____________ | ________________ | ____________ |
| Debt Repayment – 5% | _____________ | ________________ | ____________ |
| Personal – 5% | _____________ | ________________ | ____________ |
| Recreation – 5% | _____________ | ________________ | ____________ |
| Miscellaneous – 5% | _____________ | ________________ | ____________ |
Now list what the percentage dollar Target Amounts would be based on your NET income. Afterwards, list your Actual Expenditure average from the past 4 months in these categories. Then figure out what the Differences are. From the differences you can adjust the percentages up or down in each category to meet your needs. Keep in mind that the adjustments should total no more than 100% of your income. For instance, based on my income, the 10% insurance percentage is $100 a month more than my actual cost for insurance premiums. I will adjust that percentage down and move the extra money into other categories where I might be over. Filling this out will help you discover where you may have wiggle room in your budget to apply funds to other categories.
After this is completed, go to the FOCUS Financial Coaching webpage and download the 5-page Allocated Spending Plan. The webpage is under the “HELP” tab. This plan has more detailed categories to budget. Feel free to adjust the plan to meet your specific needs. For example, some people have an all-electric house so do not need to account for gas in the Utilities category and many households are cell phone only, so you don’t need to list a home phone in your expenses. Not everyone has children, so you can move money allocated for them elsewhere.
Once the plan is set, try to live within the guidelines for 1 month. Just know that it takes about 3-4 months of tweaking before the plan will really start working for you. The plan will change depending on when any once or twice per year payments are made. You can budget for them monthly and put the money in savings so they don’t throw your plan off. You will revisit the plan every month to fill in your expenses as your bills come in.
Other budgeting options: You could use a budgeting App. Ramsey has one called Every Dollar available from their website. Faith and Finance Live has one called FaithFi. Both of these have free and subscription options. For many years I have used a budget plan in Excel for my personal budget. I prefer a bigger screen than a phone to work on my budget. Try several options until you find one that works well for you.
If you would like help with your spending plan feel free to email me. I am flexible with any of the budget plans, so we can work with the one you have chosen. Remember, you can register for 3 coaching sessions for a total of $25.00 on the web page.
I will wait for about 3 weeks to post again so you can work on this and put it to use. My next post will be about paying off credit card debt.
Karen Ferguson
FOCUS Financial Coach
Email: [email protected]
Webpage: https://www.focusministries1.org/help/financial-coaching-online