It is a great business practice to make a checklist of your expenses and take it as the basis for what you should be looking at when it comes to budgeting. This is a continuation of my previous post.
Let us start with fixed expenses. What are fixed expenses? That is the expression used to describe things that must be considered each month whether you like it or not. This is different than items that can have their payment postponed or that are one time, or non-recurring expenses.
You will need to calculate your average monthly payment if you have expenses that vary from month to month (for example heating bills-higher in winter, lower in summer). You can get an average by adding your payments over a twelve month period and divide it by twelve. If you want to do it over a longer or shorter time frame, say two years, do whatever makes sense and is more practical for you.
Expenses that you will need to consider as fixed are:
Rent/Mortgage – unless your home is paid off you will have a recurring payment to a bank or lender each month.
Food-You and your family have to eat and you should include your expenses for what you eat out (even though that isn’t considered at tax time in calculating costs for maintaining a home). We are going with real world expenses here.
Transportation – That will include gas, basic maintenance (tune ups) for atos. If you have bus/train fares get the average monthly value for the price of the pass you are paying.
Utilities – Here is where you would put power (electric, gas or wind), water, and I would add cable bills here as well or Internet connections since they are now a staple of household living.
Phone bills – whatever you pay for your land line and or cell phone lines should be added here.
Insurance – That would be life, auto, homeowners and the like.
Credit card repayments are next and something that have to be addressed sooner rather than later.
Any other loan repayments – so that would be car, department store, personal loans, student loans, anything or anybody else who you owe money to.
Property taxes – that can be personal property like DMV fees and other respective personal property taxes.
Personal income tax-that is usually deducted from your paycheck but if you are self-employed you should be figuring it out and paying it at least quarterly.
Clothing – be honest and see what you have spent and spend a month on clothing.
School tuition-that inludes here books, id cards, parking.
Retirement plan funding – where money is taken out automatically for your 401K, IRA or pension, etc.
Medical plans – there is usually a fixed amount taken out of each paycheck.
Co-pay for medical bills -there are amounts that your medical plan don’t cover and that should be ball-parked since you do need to spend for that if you visit the doctor at all during the year. If not sure, take your co-pay and figure three visits a year minimum. Example: If your co-pay is $25 a visit, figure $75 added in at least to your budget.
Alimony and child support payments – these have to be figured in because if you start missing the payments, a judge can make your life pretty miserable.
Start thinking about these things and build up your checklist and we will deal with varying expenses and some more on income in the next post.
Keep the faith and stay healthy and strong people!
Oct 06 2009
Kim Isaac Greenblatt
Make Yourself A Budget Checklist