Page 34 - Workbook1E

“Before everything else; getting ready is the secret of success.”
~ Henry Ford
#2
STEP 2— Record Your Actual Monthly Expenses
Using their prior
month’s records,
Dave and Marie
divided their
canceled checks
into categories:
Housing, Auto,
Contributions, Food, Dining out, Payments, etc. Then with the Expense Category Description on Pages 32 and 33 as a guide, they recorded their prior month’s expenses on their Worksheet.
Look at the bottom section of Dave and Marie’s Spending Plan Worksheet at the end of this section and note how they completed the Expense portion of Steps 1 and 2. You’ll see they calculated that their prior month’s expenses were $7,184.
Your Prior Expenses
Guided by their sample, use records of your prior month’s expenses
to complete the Expense part of Steps 1 and 2 on your Worksheet. If the prior month had any usual expenses—or an expense not paid that typically is—use your best judgment to fine-tune it. When you’re done you’ll have a better picture of how much you spend each month.
STEP 3—Discover the Difference
This is your moment of truth. Are you living within your means? Once Dave and Marie subtracted their total expenses from their total income, they realized they were in trouble. Look at their sample Worksheet. At the bottom on Step 3 you’ll see the difference between their expenses and income resulted in excess spending of $184 per month. That adds up fast. Now they knew why they often relied on credit cards to get by.
What’s Your Difference?
Calculate the Difference between your Total Income and Total Expenses to discover how you’re doing. If your monthly expenses exceed your income, its called being “Upside Down” in your finances. Being out of balance in your financial life causes stress, worry, and never-ending debt. But knowledge is power, and you can put your financial life right.
“Looks like the Browns are upside down in their house again...”
#3
30 Workbook 1: Building a Spending Plan that Works