This article isn’t one of those typical “how-to” guides that urge you to track every purchase you’ve ever made because that usually just ends up wasting time. Tools like Mint.com can handle that for you automatically, and I’ll delve into that more later in this series.
For now, take a look at your checkbook over the past few months and identify your major expenses. Jot these down, and if you can, use Microsoft Excel. We’ll provide a link to a template at the end of this series. Here are some examples:
– Credit Cards
– Mortgage/Taxes (if not included in Escrow)
– Auto Loan
– Daycare
– Utility Bills (Gas, Electric, Water)
– Cell Phone / Home Phone
– TV / Internet
– Auto Insurance
– Life Insurance
– Cash
– Home-Owners Association (HOA) Dues
And there’s one last major category:
– Miscellaneous
We all have some small, occasional expenses like haircuts, dues, or gifts. If these costs aren’t large or recurring, there’s no need to complicate things by creating a separate category for them. For now, just group these under Miscellaneous.
If any of these expenses are automatically charged to your credit card, don’t list them separately. They’ll be covered under the “credit card” category, avoiding any confusion from duplicating entries. You can always add a note at the bottom of your list, like “Cell Phone included in the Credit Card category.”
Don’t worry about detailing every single credit card purchase right now. I’ll explain how to use Mint.com for that later. For the time being, just group all your credit cards into one category called “Credit Cards.” This will simplify tracking and give you a clearer picture of your monthly spending. Knowing your total credit card spending is important when we adjust your budget later.
If your credit card balances vary greatly from month to month, just use an average monthly total for now. We’ll tweak this number later as we work toward your financial goals.
Next, we’ll compare these expenses to your income.
… Continue to the Next Chapter
