Every dollar of your income should be allocated to some category on this
sheet. Money "left over" should be put back into a category even if you make up a
new category. You are making the spending decisions ahead of time here. Almost
every category (except debt) should have some dollar amount in it. Example: If you
do not plan to replace the furniture, when you do replace it you will cause strain or
borrowing, so go ahead and plan now by saving. I have actually had people tell me
that they can do without clothing. Oh come ON!! Be careful in your zeal to make
the numbers work that you don't substitute the urgent for the important.
Fill in the amount for each subcategory under "Subtotal" and then the total
for each main category under "Total." As you go through your first month, fill in
the "Actually Spent" column with your real expenses or the saving you did for that
area. If there is a substantial difference in the plan versus the reality something has
to give. You will either have to adjust the amount allocated to that area up and
another down or you will have to better control your spending in that area.
"%Take Home Pay" is percentage of take home pay or what percentage of
your total take home pay did you spend on "Housing", as an example. We will then
compare your percentages with those on Sheet 6 to determine if you need to
consider adjusting your lifestyle.
* beside an item means you should use the "envelope system"
(1) Emergency Fund should get ALL the savings until 3-6 months of expenses have
Note: Savings should be increased as you get closer to being debt free.
Hint: By saving early for Christmas and other gifts, you can get great buys and give
better gifts for the same money.