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I am the “budgeteer” in our family, and I am really proud of that. I grab a cup of coffee, grab my mac and go our bank activities at the end of each month. I’m totally a planner and thinker, given my Myers-Briggs personality type [ENTJ]. Analyzing our finances is my “whoosah” activity if you will. My goal is to better understand where all of our money is going, how we’re spending and how can we improve. It’s become even more important, as we are looking to grow our family and having some room to breathe in our budget is a must.
My process is as follows: I usually sit down in front of the computer … then I open up a spreadsheet to separate all of our bank activities into “variable expenses” and “fixed expenses” buckets. [Finally putting my MBA finance skills to practical use!]
The fixed expenses are things like the mortgage or rent payments, car payments, insurance premiums, and others. These are things that you can’t avoid to be paying. These expenses are fixed in the sense that the amounts do not vary, and you will be paying the same amount each month.
The variable expenses, on the other hand, are everything else that will vary month to month. This category will include expenses like gas, electricity, fuel, water, which are things that you most likely need but cannot predict the variance each month. Part of this category is food expenses (including groceries and restaurant meals, which you can break down into separate categories), purchases (clothing), etc. The fixed expenses category is your sweet spot for cutting expenses.
My Guilty Pleasure
One of “our” bigger variable expenses is actually due to my coffee addiction problem: Starbucks. I’ve made it an unfortunate habit to pick up a cup of “wake-me-up” on my way to work. But those wonderful Grande Lattes that fuel my addition contribute a significant amount to our expenses each month. So … I’m working on an exit plan … stay tuned.
When assessing your budget this month, create a spreadsheet (download a FREE Template using a form below) and jot down all of your expenses. Is there something that you could be using less of? For example, could you turn off your air conditioning or put it on a lower setting while you’re at work? Or could you cut one restaurant outing a month?
Right off the bat, do you know what your largest monthly [variable and controllable] expenses will be?
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I love hearing from you and as always would love to learn your ideas, perspectives, and comments. You don’t know, what you don’t know and I am all ears to hear about what you have to say. And if you just want to say “hi” – would love to take the opportunity to say “hi” back!