KNOW YOUR INCOME AND EXPENSES

The next step is to keep track of your income and your expenses for every month. Write down what you and others in your family earn, and then your monthly expenses. Include a category for savings and investing. What are you paying yourself every month? Many people get into the habit of saving and investing by following this advice: always pay yourself or your family first. Many people find it easier to pay themselves first if they allow their bank to automatically remove money from their paycheck and deposit it into a savings or investment account. Likely even better, for tax purposes, is to participate in an employer sponsored retirement plan such as a 401(k), 403(b), or 457(b). These plans will typically not only automatically deduct money from your paycheck, but will immediately reduce the taxes you are paying. Additionally, in many plans the employer matches some or all of your contribution. When your employer does that, it’s offering “free money.” Any time you have automatic deductions made from your paycheck or bank account, you’ll increase the chances of being able to stick to your plan and to realize your goals.

“But I Spend Everything I Make”

If you are spending all your income, and never have money to save or invest, you’ll need to look for ways to cut back on your expenses. When you watch where you spend your money, you will be surprised how small everyday expenses that you can do without add up over a year.

1

Home Mortgage Payment/Rent

35

Cleaners/Laundry

2

Real Property Tax

36

Haircuts/Hair Styling

(If not included in mortgage)

37

Cosmetics

3

Homeowner's Insurance

38

Child Care Expenses

(If not included in mortgage)

39

Lessons (Music, Dance, etc.)

4

Home Maintenance/Repair

40

Toys

5

Yard Maintenance

41

Pet Expenses

6

Pool Maintenance

42

Vacation Budget

7

Maid Service

43

Entertainment

8

Pest Control Service

44

Personal Gifts

9

Household Purchases

45

Charitable Contributions

(Furniture, Appliances, etc.)

46

Political Contributions

10

Electricity

47

Business Lunches

11

Gas

48

Subscriptions

12

Water/Sewer

49

Professional Dues

13

Sanitation

50

Country Club Dues

14

Telephone

51

Health Spa Dues

(Including long distance)

52

Home Equity Loans

15

Cable Television

53

Credit Card Debt

16

Car Phone

54

Other Installment Debt

17

Automobile Loan - Car #1

55

Student Loans

18

Automobile Loan - Car #2

56

Education Expenses

19

Automobile Maintenance (All Cars)

57

College Education Fund

20

Automobile Fuel/Oil

58

IRA Contribution

21

Automobile Insurance

59

401(k) Plan

22

Automobile Parking

60

SEP-IRA, Keogh Plan

23

Automobile Tags

61

Company Savings Plan

24

Automobile Washing

62

ESOP

25

Other Transportation Expenses

63

Annuities

26

Food/Groceries/Household Supplies

64

Other Savings & Investments

27

Pharmaceutical Products

65

Rental Property Mortgage

28

Medical/Dental Expenses

66

Rental Property Expenses

29

Medical/Dental Insurance

67

Miscellaneous

30

Disability Income Insurance

68

31

Life Insurance

69

32

Malpractice Insurance

70

33

Personal Liability Insurance

71

34

Clothing

72

Download the spreadsheet Monthly Expenses