Many people don’t want to sit down and figure out how much money they spend each month because, frankly, it scares them.  Not knowing is much easier than facing the reality that you are overextending yourself each month.  What are you spending money on each month?  Here are some things to consider:

Mortgage/rent

Utilities – electricity, water, gas, phone, cable/satellite, trash, mobile phone

Automobile – monthly payment, insurance, fuel

Food – groceries, restaurants (fast food, casual dining, etc.)

Childcare, education expenses

Miscellaneous – clothing, toiletries, entertainment, grooming, birthdays, medical (co-pays and prescriptions)

Debts – credit card payments, loan payments

Your best resource for finding out how much money you actually spend each month is to look at your monthly bank statement.  Gather your last three months of bank statements, a calculator, a pad of paper and a pencil.

Take your statements and start writing down your expenditures.  If you are using your credit cards to cover the gap of monthly expenses, get those statements (for the same three month period) and add what you’re charging to your cards on a monthly basis to your list.  If you withdraw cash for expenses (i.e. gas, lunches, etc.) every month, you will need to tally this as well.  Don’t try and do this by memory … use your statements.

You also have to think about those things that don’t occur on a monthly basis (premiums that are due quarterly, semi-annual or annual) such as:

Home – insurance, taxes (if these are not included in your monthly mortgage payment)

Renters – insurance

Auto – tires, oil changes/tune-ups, registration

Life Insurance

These expenses, while not monthly, still need to be included in your monthly spending tally.  For yearly expenses, take the total due and divide by twelve – then each month, 1/12^th of the yearly expense will need to be accounted for. 

Once you’ve accounted for all your typical monthly expenses, this is the amount you typically spend in a month.