Managing Your Money

I’m going to make this budget process much simpler for you. I want you to look at just two months from the past year. Take your most expensive month — possibly December during the gift buying frenzy, or maybe a summer month that includes your family holiday — plus a more normal month, like March, when you don’t do as many extra things. Then average your spending for those two months. Voila! — your budget.

So grab your checkbook and get started with the worksheets that follow (no negligee required). Do one worksheet for your most expensive month and another for your least expensive. And yes, include that vacation trip for a couple thousand dollars in your average living cost, because this will help you learn to plan for it instead of relying on MasterCard or Visa. Next vacation, you’re paying cash. (Now that’s what I call the makings of a real date night!)

WORKSHEET 1: EXPENSES FOR YOUR MOST EXPENSIVE MONTH (Cash Outflows)

Rent/Mortgage Payment $________
Auto Expenses $________
Food $________
Child Care $________
Telephone (and Cell Phone) $________
Utilities $________
Credit Card Payments $________
Loan Payments $________
Insurance Premiums $________
Medical and Dental $________
Entertainment (Including Vacations) $________
Gifts $________
Donations $________
House Maintenance $________
Other $________

Total Expenses: $________

WORKSHEET 2: EXPENSES FOR A NORMAL MONTH (Cash Outflows)

Rent/Mortgage Payment $________
Auto Expenses $________
Food $________
Child Care $________
Telephone (and Cell Phone) $________
Utilities $________
Credit Card Payments $________
Loan Payments $________
Insurance Premiums $________
Medical and Dental $________
Entertainment (Including Vacations) $________
Gifts $________
Donations $________
House Maintenance $________
Other: _______________ $________
Other: _______________ $________
Other: _______________ $________

Total Expenses: $________

WORKSHEET 3: YOUR GENERAL BUDGET (The Average of Expenses for Your Most Expensive Month and a Normal Month)

Rent/Mortgage Payment $________
Auto Expenses $________
Food $________
Child Care $________
Telephone (and Cell Phone) $________
Utilities $________
Credit Card Payments $________
Loan Payments $________
Insurance Premiums $________
Medical and Dental $________
Entertainment (Including Vacations) $________
Gifts $________
Donations $________
House Maintenance $________
Other: _______________ $________
Other: _______________ $________
Other: _______________ $________

Total Expenses: $________

Now calculate your monthly income. (If this varies from month to month, you will want to follow an averaging procedure similar to the way you determined your monthly expenses.) Use this worksheet:

WORKSHEET 4: MONTHLY INCOME (Cash Inflows)

Net Salary/Wages $________
(This is after payroll taxes, federal and state taxes, and FICA taxes)
Other Income (dividends) $________
Rental Income $________
Gain on Sale of Stocks and Bonds $________
Tax Refund $________
Gifts or Grants $________
Alimony or Child Support $________
Other: _______________ $________
Other: _______________ $________
Other: _______________ $________

Total Income: $________

Now you simply subtract your average monthly expenses from your monthly income to find your monthly surplus (or monthly deficit, if expenses are more than income):

WORKSHEET 5: STATEMENT OF TOTAL INCOME AND EXPENSES

Total Monthly Income: $________

Total Monthly Expenses: $________

Surplus (or Deficit) — Income less Expenses: $________

To take managing your money to the next level, take as your starting point the general budget you calculated by using your most and least expensive month. And then, from this month forward, begin tracking your spending. If you’re computer savvy, do it through financial software such as Quicken Personal Finance, Microsoft Money, or even Microsoft Excel. If using the computer is too intimidating, stick with the old checkbook, pen, and paper. (That still works for me.)

By the way, how does it feel to be raising your head from the sand? It was getting stuffy down there anyway, wasn’t it?

For more information, check out Carolyn's new book, Women Take Charge of Your Money.