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 create a list of 3-6 months of expenditures. 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, then you'll probably need to track your spending going forward for a few months to create your list. Once you've compiled your list of transactions, categorize each expenditure, and then total each category by month. This will give you a picture of your current spending.
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