Comparing your spending to your income

The following process will help you measure your finances by figuring out how your total spending compares to your total household income. 1. Gather necessary materials

• Stationery: Pen, pencil, paper, calculator
• Financial Information
  • Check registers
  • Bank statements
  • Receipts for major purchases not made with a credit card
  • Credit card expense records for the past 12 months
  • Income records, payslips, deposit slips, direct deposit information, business records

Your spouse or partner should gather up the same information to give you as complete a picture as possible of how your household spending compares to your household income. 2. Categorise expenses into 3 categories

• Fixed expenses: expenses that stay the same from month to month such as, rent or mortgage, car loan and insurance.
• Variable expenses: expenses that vary from month to month such as, groceries, petrol, utilities, restaurant meals, movies, cd's, books, etc.
• Periodic expenses: expenses may be fixed or variable. The difference is that you pay them just once in a while, such as quarterly, every six months, or annually. Examples include education fees, some insurance premiums, property taxes and dues.

3. Calculate the total annual amounts for each of your debts and for all your living expenses 4. Figure out the fritter factor Handle the expenses that need to fritter away. For one month bot you and your partner should write down everything you purchase with cash, a debit card, or a credit card. After a month, add up expenditures on nonessential items. Multiply this number by 12 for an estimate.