Do you ever wonder where your money was spent? Do you dream about buying something but think you can never afford it? Do you live from paycheck to paycheck?
If you answered yes to any of these questions, a spending plan can help you be in charge of your money. A spending plan helps you get more for your money, work toward your financial goals, spend wisely, reduce the need for consumer credit, and save for emergencies.
Developing a spending plan follows 3 basic steps:
1) Know how much money you have coming in each month.
2) Find out how you usually spend your money.
3) Develop a plan for how you will spend your money in the future.
Begin by listing all sources and amounts of income available for spending and saving each month (take-home amount after taxes and other deductions). Include only income you know for sure you will be receiving. If your income changes from month to month, use past income amounts to get an average. Sources of income include: wages and salaries, bonuses and commissions, interest/dividends, alimony & child support, tax refunds, Earned Income Credit, etc.
Then list all monthly expenses. Use past bills, canceled checks, and receipts to determine how much you spend each month. List all of your expenses, especially small amounts. For other ways to track your spending, contact the Jones County Extension office for the publication “Tracking Your Spending,” PM 1918 or access at /Publications/PM1918.pdf Be sure to include expenses not paid on a monthly basis such as car registration, Christmas and birthday gifts, insurance, school supplies, club dues, subscriptions, taxes, etc. Total the amount of these expenses and divide by 12. Set aside this amount each month to cover these expenses.
Subtract total monthly expenses from total monthly income. If expenses are more than income, adjust the amounts you plan to spend in each expense category based. Add up the revised expenses and compare again to current income. If you still don’t have enough income to cover obligations and pay necessary living expenses, you may need to either increase income through part-time or temporary work or continue to reduce expenses. If income is greater than expenses, allocate the extra dollars to savings for your financial goals.
For more information on developing a spending plan, contact the Jones County office at 462-2791 for money management publications or presentations available to groups.
K Miller
1/16/2009