Checking In On Your Spending
June 8, 2022 | View PDF
With the rising cost of many items, does it feel like you’re struggling to keep your head above water? Whether you’re experiencing cutbacks, job loss, loss of a family member, or any other major life event, it could contribute to your concern for checking in on your spending. Now you might be wondering how do I go about checking in on my spending? This is where developing a spending plan can be helpful.
There are five steps that you can take to develop a spending plan to help you track your spending: 1. List Income, 2. Your Monthly Expenses, 3. Balance Income and Expenses, 4. Review, Track Expenses and Revise Spending Plan, and 5. Managing Your Spending Plan.
Step 1: To begin developing a spending plan, you need to determine what your monthly income is. If you have a job with a fluctuating income (seasonal worker, farmers, ranchers, and others), it might be beneficial to take two estimates of the least and most reasonable amounts you could see during a month. Sources of income can vary from money earned at a job, saving account withdraws, tips, social security, benefits (veterans, retirement, etc.), public assistance, etc.
Step 2: The next step to developing a spending plan is determining your monthly expenses. Since expenses vary from person to person, there are some general categories of monthly expenses that might apply to you. Your housing/rent, maintenance on your house, food, transportation, credit card payments, utilities, clothes/personal items, insurance, childcare, etc. Remember, some of your expenses might not be monthly and should also be considered when developing your spending plan.
Step 3: The third step in developing your spending plan is balancing your income and expenses. Some questions are key to ask yourself during this process: what expenses are essential to your family’s well-being? What areas can be reduced to keep your family’s spending within your income level? When you’re working through this step, if you discover your expenses are more than your income, you could find ways to increase your income, cut spending, reduce fixed expenses, or maybe you have assets you could sell for cash?
Step 4: Now that you have worked through the first three steps of developing a spending plan, it is time to put it into action and review your plan with others within your household. If you discover it is not working for you after keeping track of your income, expenses, and following your plan for a few months. It might be time to revisit your plan and move some items around to help meet your needs.
Step 5: It is important to continue to manage your spending plan, and this could be done by one individual taking the lead in keeping track of the household spending plan. It might also be beneficial to set up a record-keeping system to help keep track of the spending records, bills, receipts, statements, etc.
• It’s important to note that no two spending plans look alike, and what works for you might not work for your neighbor. However, identifying a spending plan that works for you could help you manage your finances.
To get the Developing a Spending Plan MontGuide and for other financial or estate planning MontGuides for Montanans, contact Carrie Krug at the MSU Extension Richland County office at 406-433-1206 or find them online here: https://store.msuextension.org/Departments/MontGuides-by-Category/HR/Family-Financial-Management.aspx.