Fixed Expenses
Your fixed expenses are an essential part of your spending plan. Fixed expenses are expenses that you have every month. They really don't change much, although some of your fixed expenses could vary slightly. Your fixed expenses are most likely monthly obligations such as your mortgage or rent, insurance premiums, membership or service fees, and auto-loan payments. You might also include some expenses that vary slightly month to month, but are fairly stable. These expenses might include your utility payments, phone or cell phone payments, or any other service that you pay for each month. It is important that the dollar amount for these charges does not change much from month to month.
Crunch the Numbers
Tally up the total costs for your fixed expenses. Once you have added all of these together, you have an idea of what you're basic monthly obligations are. These are the costs you have to pay no matter what. Whether you sit around the house, or jaunt around the world, you have to come up with this much each month. Given this information, take a quick glance at your household income. This gives you an initial preview of how you're doing.
Line 'Em Up
Now that you have all of your basic monthly expenses written down, line them up from most expensive to least expensive. If you have access to spreadsheet software, you might want to enter your budget into the spreadsheet so you can slice, dice, and sort. Microsoft Excel works quite well, and Google has offered free spreadsheet software in the past. With your monthly expenses arranged from highest to lowest, look for any surprises. Does anything stick out like a sore thumb? If so, investigate alternatives — see if there is any creative way for you to put less of your money toward that expense going forward.
There are a lot of tools on the Web that you can use to manage your spending. Some of them are even free. Search with terms like “budget spreadsheet” or “budget worksheet,” and you can find some nice templates. Find one that works for you — some are very basic, and some have lots of bells and whistles.
Start Cutting
Most of your monthly expenses are probably true necessities. However, there might be some that fall into a gray area; they're not quite necessary, but they are near-necessities. Try to find just one or two expenses that you can cut back on for starters. You don't have to revamp the whole thing, just start by making improvements in one or two areas. Perhaps it's that health-club membership that you only use once or twice a week. Could you jog, bike, or lift weights with dumbbells at home instead? Maybe it's the cable bill. Do you have enough time to watch TV to make the expense worthwhile?
