Find the magic number
Do you know how much money is
actually coming in each month?
Figure that out first, so you know
what’s available for spending and
saving.
Now that you’ve got your total,
it’s time to start tallying up your
expenses. Budget breakthrough
number one is being aware of what
you are spending, and this means
getting real. These numbers show
what you actually spend – not what
you
think
you spend or
would like
to
spend. To find your magic number,
money experts recommend detailing
the family’s every expense until you
have an accurate figure. That means
getting nifty into note-keeping for one
to three months.
Hoard up receipts like they are
precious dollars, and write down
any other cash spends that come
without receipts. Some budgeting
apps, like Wally, allow you to scan
receipts, which it reads and allocates
to targeted categories. Plugging in
amounts electronically can make
budgets easier to do on the fly,
although a simple spreadsheet or
even a notepad and pen do the job
just as well.
As you calculate everyday costs,
attack that stack of bills and tot up
how much goes to rent, helper, gym
fees and entertainment, including
TV and phone, each month. Then,
enter both sets of numbers into
two lists: your fixed monthly costs
– those regular payments that are
the same every month, like rent – in
one column, and your discretionary
spending – irregular costs that
change, like your shopping bills or
eating out – in a second column. Ta-
da! You have the start of a budget.
For some, just keeping this tally
is a source for satisfaction. This basic
tracking allows families to monitor
exactly where their money goes, and
to readjust month to month if they
I meet a lot of couples who are
actually spending more than they
make – even with seven-figure
incomes – because they misjudge the
amount of taxes they need to pay.
October 2013
43
