Step 5

You're almost there!! See 5 steps -give or take - that's not so bad now is it?

This step needs to be reserved for when you are finished calculating your monthly expenses - so if you're not at that point yet, be patient and come back when you've finished. You also need to have finished the other steps as well.

If you have a consistent paycheck every month (the amount never varies) then you only need to do this step a couple times (for each bill cycle - those bills that only show up every 3 months or so).

If you get paid twice a month and the pay varies you may need to do this with every paycheck.

If your family is like mine - and your paycheck varies due to overtime or whatnot, then you should probably do what I do and follow this step EVERY month. I know it sounds like a pain, but it does make you feel in control - because you WILL be!!

Step 5:

- Start off by putting your paycheck amount at the top of a piece of paper.

- Now I'm a HUGE believer in paying yourself first (towards your goals - not shoes or electronics); however, let's be realistic. Bills have to be paid. So that is where we start.

- Start listing your bills under your paycheck amount. Remember this includes all automatic deductions taken out of your accounts - even on a credit card.

- If you have credit card debt and your goal is to get out of it - then wait on listing this bill. Same with Student loan debt - IF it is your goal to pay it off faster, otherwise list the minimum amount with your bills.

- Add up all your bills and deduct that amount from your paycheck. You may want to leave a bit of a buffer in your checking account for those bills that vary month to month.

- Deduct what you need for grocery/toiletries (you should have an idea of this from keeping track of your expenses for a month - and you may have realized you could cut back because you were spending more than you really realized.)

- Now it's time to start paying yourself.

- Decide (if you haven't already) on an amount to pay towards and IRA and send this check off right away. This will keep you from spending it later.

- Put an amount of money away in a savings account. Continue to do this until you have a buffer of 6 months living expenses + a little extra emergency fund towards those "surprises" that pop-up (car repair, home improvement, etc).

- Choose an amount of money to put towards your goal.

- Finally, the rest of the money is yours to spend as you wish throughout the month.

Now you know exactly where your money is going and the stress of where the money will come from is for the most part eliminated.

Here is an example of a monthly budget (purely made up):

Paycheck: $4000.00

Bills:
$1000 - Mortgage
$125 - Gas company
$50 - Life insurance
$25 - Sewer bill
$120 - Electric company
$124 - T.V. and internet
$75 - cell phone
$38 - Trash pick-up
$46 - American Water
$15 - Weekend paper
$640 - Daycare

Bill total: $2258 Minus paycheck total:$1742

Grocery and toiletries - $400
IRA contribution - $175
Savings contribution - $300
Goal contribution - $230

Leaves: $637 for monthly spending (going out to eat, buying clothes or other items that are a want vs. need)

For the next step - we will be heading to the bank and hiding the plastic!!!