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Where is the money coming from and where does it all go?

Identify Income & Expenses

Do you check your bank account at the end of the month and wonder where all the money went?  Before you can manage your money, you have to know how you’re spending it. The most important step to creating your budget is to understand how money comes in and why it goes out.    

What are my Sources of Income?

List all the sources of money flowing into your bank account (e.g., work, student loans, parents) each month, and the amount that comes in from each source.  If you get only one disbursement per semester from financial aid (e.g., student loans and scholarships),  you can determine the monthly allowance by taking the amount refunded to you less the cost of your books and dividing it by the number of months in the semester.

Example |  You earn $400/month from your job, and you expect to receive a $1,200 refund after all your financial aid disburses.   For budgeting purposes, you have  $600/month flowing into your account for a six-month period of time.  Although the entire refund of $1,200 will be deposited into your account in August, it needs to last you to the end of December.


Where is My Money Going? 

The best way to get an understanding of your current spending is to analyze what you buy and create a list of total expenses. This includes major expenses such as bills and transportation along with items you may not always realize are adding up, like streaming services and cups of coffee.  If you use a debit or credit card for most of your purchases, you can download a list of transactions from your online account.  If you're a cash user, you'll probably need to track your spending by hand for a few months to create your list. Track your purchases for at least a month, but a more accurate understanding of your expenses will require tracking for 3-6 months. 

Once you've compiled your list of transactions, categorize each expenditure and then total each category by month. This will give you the best snapshot of your expenses and allow you to see how much income you will need to bring in to cover your costs or what needs to be cut down to stretch your dollars the furthest.  

Commonly Used Spending Categories

Food:                    Groceries • Dining Out 

Housing:               Mortgage/Rent • Property Insurance • Property Taxes • Household Repairs

Utilities:                Electricity • Water • Heating • Garbage • Phones • Television • Internet 

Transportation:    Fuel • Tires • Oil Changes • Maintenance • Parking Fees • Repairs • DMV Fees

Recreation:          Gym Membership • Subscriptions • Entertainment

Savings:               Emergency Fund • Retirement • Big Purchase

Personal Care:     Hair Cut • Toiletries • Cleaning Supplies

Medical:                Doctor’s Visits • Medicines

Giving:                  Tithing • Charities