To achieve your financial goals, you have to put a plan in place. Having a spending plan is the best way to achieve the goals you have set and you may discover new goals you want to put in place. I like the spending plan that is referred to as Zero Balance Budgeting. You put your income at the top of the page and deduct all of your giving, savings and expenses until you reach 0. You give every dollar earned a place to go. To begin, you need an idea of what you are currently earning and spending each month.
Gather your checkbook and credit card statements and start to list your monthly expenses for the past 4 months. This should give you a good idea where your money is being spent. We will start with the categories shown below. No matter how many people there are in your family, group all of the expenses together in these categories. What about children’s hobbies or activities or your own? Let’s put those expenses down as Miscellaneous for now. Once you get a grip on the money you have coming in and what is going out of your accounts, then you can budget in non-essential items from any surplus you have in your budget.
- GIVING: List the various places you where you are donating.
- SAVINGS: Are you systematically saving, or is it sporadically?
- HOUSING: List your rent/mortgage, HOA fees, utilities, phone and/or cell phone, insurance, and any savings for repairs.
- FOOD: Write down what you have spent on food to cook at home, take out or eaten out. Include snacks or coffee you pick up on the go so you have a real view of what you are spending each month.
- TRANSPORTATION: Auto loan/lease, auto insurance, gas, parking fees and public transportation costs, if applicable. Also include savings for oil changes, tire replacement, repairs and license renewal fees.
- CLOTHING: Include costs for beauty salon or nail salon in this category as well as clothing, dry cleaning, and accessory purchases.
- MEDICAL: Medical insurance, doctor’s bills, dentist bills, eye care, prescriptions, counseling, vitamins and over the counter medicines taken on a regular basis.
- CREDIT CARDS: List each individually with the total amount owed and the minimum amount paid each month. Also make note of the recommended monthly payment that would pay off the card in 3 years.
- MISCELLANEOUS: Whatever you didn’t list in any of the above categories. Childcare expenses, legal expenses. Any hobbies or activities you or your children are involved in. If you have a pet, include the cost for food and savings for vet bills.
The four month review should give you good averages for each of the categories so you can plan for each category monthly. In the next blog I will give you a more detailed spending plan you may want to use if you don’t already have something in place. There will also be recommended percentages for each category. You can also go to the Financial Coach page on the FOCUS Ministries website and download the Spending Plan to get a head start. If you would like any help, feel free to contact me via email.
Karen Ferguson
FOCUS Financial Coach
Email: [email protected]
Web page: https://www.focusministries1.org/help/financial-coaching-online
Sounds great! My problem, online shopping, what I see, I want! Over 14?thousand in debt! I’ll be in debt till I die the way it looks!
I will be addressing paying off credit cards in about a month, after the next post about creating a spending plan. Whatever plan you use, you will need a spending plan. With that in place you will be able to determine where you can move money from to pay off debt. If you would like one-on-one help, consider registering for credit counseling through FOCUS, 3 sessions for $25.00. You may also email me directly at [email protected].