Organizing Your Monthly Expenses

Creating a monthly budget for you and your household is a necessary task – but many say it comes with its own set of challenges. There are some people who are able to live frugally without too many monthly expenses, many of whom are single; and there are others who have an extensive list of expenses due to having children and/or monthly debt payments. Regardless of which category you fall into, having a monthly budget that outlines all of your expenses is vital. But first, before you get started, you need to organize your expenses so your budget makes sense.

The first step requires you to get all of your information together so you can understand where you currently stand financially. Having a starting point will help you develop a thorough financial road map for each month. As you get organized, here are a few things you’ll need to know:

Your overall monthly income.

This is the most important first step, because how much you bring in each month will be the driving factor in how you set your budget. If you are paid once a month, write it down as your net income (be
sure to only note your take-home pay). If you are paid twice a month or bi-weekly, you can add two net pays together as your monthly income. If you don’t have a fixed amount you are paid each month (if you are a freelancer or work in sales, for example), a good plan is to look at what you make in a year and divide it by 12. Be sure to include any additional income, such as child support or alimony.

Your fixed expenses each month.

This will be easy to calculate – these payments do not vary. They can include rent or mortgage, auto insurance, subscriptions and memberships, and HOA dues. You can check your monthly bank statements for these expenses.

Your varied monthly expenses.

These expenses include anything that doesn’t add up to the same total every month, such as groceries, gas for your car, and social activities like dining out and concerts. This can also include medical bills as well as utilities.

What you owe to creditors / lenders.

If you have credit card or loan debt, be sure to include this as you get organized. Don’t forget to map out your balances, the interest you pay, and minimum payments.

Expenses that don’t occur regularly.

These can include annual fees (such as big box store membership, Amazon Prime, and car clubs), home expenses (furniture, renovations, everyday household items), the cost of clothing, and holiday expenses (Christmas gifts and decor, birthdays, Thanksgiving).

Once you’ve gotten your expenses mapped out and organized, you can create a monthly budget that works for you and your household. Best of luck – and remember, your Polam team is here to help you with any financial questions and concerns.