When you start to take control of your money, keep it simple: track purchases for 30 days. Your goal is to answer the question, “Where is all the money going?” Simply make a list on a few sheets of paper. Track monthly expenses like mortgage, rent, utilities, car payment, and phone bill, too.
Commit to tracking expenses for another 30 days. This time, also record expenses for insurance, property taxes, vacations, holiday/birthday expenses. After the first 60 days, categorize each expense (see below). Your categories should represent some percentage of your net income.
Do your expenses fit within these ranges for each category?
- 10% on tithing, gifts to others, and charitable gifts,
- 25% on housing,
- 10% on transportation,
- 10% on food,
- 5% on utilities,
- 10% on insurance,
- 10% on saving,
- 10% on medical,
- 2% on clothing,
- 5% on vacation,
- 3% on debt repayment.
These are general percentages. I can show you how to more precisely track and plan for these and other expenses. In the meantime, discuss each expense with an accountability partner in terms of “needs versus wants.”