Start a new expense list reflecting what are you spending money on monthly that varies from month to month. Again, review your credit card statements and checkbook. Average two or three months of expenses together to make sure that you have a good number to input into your spreadsheet. Groceries, entertainment, medical co-pays, clothing, day or weekend trips should be noted here. Average dollar amounts for charitable contributions, meals out, and repairs to the house and/or car should be noted. Costs for personal care such as hair care, vitamins, nails, makeup, dental expenses, toiletries, massage, chiropractic or other similar expenses should be added to your spreadsheet. Remember to include household costs such as cleaning supplies, décor items and paper goods.
If you pay most of these items via a credit card, debit card or out of a checkbook, it will be easier to determine an average amount being paid on these expenses. If you pay a lot of expenses by cash, you may need to track your expenses for two or three months to determine what you are spending on each type of expense. Once you have your average monthly number, multiply by 12 to get your annual amounts for these expenses.
To your monthly variable expenses, you need to add expenses or payments that occur at least once a year, but not monthly. Think about holidays and the extra expenses of gifts, food, décor and travel. Do you host Thanksgiving every year? Do you have a July 4th barbeque? While it is not a legal holiday, many consider Superbowl Sunday close to one and host a party each year. Consider gifts for other occasions – birthdays, anniversaries, graduations, weddings, baby showers, etc. What are the expenses for your annual vacation? Back to school shopping should be added here.
Walk yourself through a year in your life and think about all the events and extras that occur regularly, just not every month. Once you have these expenses, you need to multiply them by how often they occur in a year to get an annualized amount for each expense. Total your variable expenses to complete this section.
It is not unusual for most individuals at this point to be surprised about how much money they feel they waste every month. This is way creating the spending plan is really going to help you prioritize how you want to spend your money.