How did I get here?

This section looks at how you spend your money, so that when we start turning your dreams into goals, we know exactly where you stand.

Exercise 5: Monthly expenses

OK, this exercise is a pain in the butt. It will take the better part of an evening or weekend, depending on how much stuff you have. However, a day or so of serious, careful planning for something that will affect the rest of your life is a good idea, no?

What you need:

• Last 12 months of utility bills
• Last 12 months of cancelled checks and bank statements
• Last 12 months of credit card bills
• At least two months of receipts/written records*

* I strongly urge you to write down every dime you spend for at least a month, preferably two or more, so you can see exactly where all your money is going. I bet you'll be surprised! For instance, I discovered I was spending about $600.00 a year on food at work-- yikes!

The following worksheet is based on the one used by Consumer Credit Counseling Service, a national nonprofit organization which helps consumers manage their finances. It is one of the finest resources available to help you manage your money. Counseling is free, and their programs are run at extremely low costs. For more, see my financial resources list .

Print this out or write it down and fill out each applicable expense. The more accurate you are, the more useful this will be later. Base as much as possible on receipts and written records, rather than ballpark estimates. You can do ballpark estimates now, but it would be better to keep records for a month or more and then revise any incorrect guesses.

You will fill in numbers for the following categories:

• Shelter
• Utilities
• Insurance
• Food
• Transportation
• Family costs
• Personal care
• Health costs
• Gifts/outside giving
• Miscellaneous

We will also do a separate table for current transition costs, as well as future ones. Don't include current transition costs here.

We'll be dealing with the column marked "Revised amount" in Exercise 8. Leave it blank for now.

Notes:

• Unusual items that are one-time expenses can throw off your averages. For instance, if you needed a new refrigerator last month and bought it with cash, divide the price by 12, since most people don't have more than one big ticket item like that a year.

Notes:

• Some utilities fluxuate seasonally. For this reason, it's best to add up a year of these bills and divide it by 12.
• Telephone bills also fluctuate. Don't forget calling cards as well as home service.

Notes:

• Homeowners/renters insurance is listed under shelter.
• If your health/dental or other policies are deducted from your paycheck, you don't need to include the amount here.

Notes:

• This tends to be one of the most wasteful areas. Problem areas are impulse buys and convenience buys:
  • Candy, coffee, chips, soda
  • Milk, etc. at the convenience store instead of the big (cheaper) store
  • Getting lunch at work instead of bringing food
• Receipts/records are especially important for food. It's easy to forget about a drink with friends, milk from the convenience store, a coffee, or a fast-food stop now and then. You need an accurate record!

Notes:

• Car insurance is under Insurance. Don't list it twice.

Order the interactive spreadsheet of this financing information.