Printable format

FREE subscription to DebtSmart® Email Newsletter and FREE software too!

Part 3: Analyze Your Expenses

Now that you have a specific money-saving goal to strive towards, it's time to dive into the process of lowering your monthly bills and expenditures.

Obviously, a choice you have is to work "overtime" hours at your current place of employment, or get a "second" job for additional income. For the record, the following process we will divulge does not look at this opportunity.

Hence, the agenda from this point forward will be to analyze all your expenditures, and lower the monthly amounts of each bill one by one in order to save the difference.

Where To Begin 
~~~~~~~~~~~~ 

To come up with extra money, or to generate a substantial increase in your monthly savings, you MUST first find out where you are spending the money you earn.

Everyone's individual saving potential is unique, varying anywhere from $10-$1500+ a month. Since incomes and monthly expenses differ for literally every household, it is impossible to set a standardized target everyone can achieve.

Point is, regardless of how much money you make per month, it is imperative that you find out how much money you are spending per month, and even more specifically, how much you spend on each specific bill/expenditure.

The degree of accuracy you put towards this task is up to you as always, but at some point you will need to list out all your monthly expenses. To put your mind at ease, you don't need to spend hours upon hours calculating averages and compiling data for the past decade. You simply need to list out each and every expense you pay per month, and the most accurate estimations for each particular expense.

Here are some of the most common monthly bills found in most households:

If you have the most current statements handy, then by all means use the exact amounts, however try not to let this exercise consume more than an hour of your time. This is not meant to depress you, or criticize your spending habits. It is merely a list to help provide you with a "bird's eye view" of how and where you spend your money.

Now That You Have Your List
~~~~~~~~~~~~~~~~~~~~~ 
We all have some spending habits that may be a bit excessive, or untamed. You may have even surprised yourself as you were making your list of expenses and had to double check to see if you were writing the correct amount. That's ok! Think of it this way, it will only get better from here on out.

Our goal now, is to eliminate all the excessive, unnecessary spending on as many monthly bills as possible.

Using your list of bills/expenditures, go through and highlight or underline FIVE of the bills that seem to be the most excessive. In other words, you are looking for five of your bills that you can immediately tell are unattractively absurd.

These are the five bills you will want to tackle first since they are the most extreme and will probably be the easiest to lower.

NEXT ISSUE - Part 4: Eliminating Unnecessary Spending

--End--