A First Spending Plan

by Diane Conlinn, November 6, 2000

You've tracked your expenses for a while and now you want to know what to do with these figures. You've categorized each expense, and you can see how your spending reflects your lifestyle. Let's review a set of expenses and see what they tell us about the individual, and actually make a workable spending plan for the future.

Plan I.

$650.00 Rent
$160.00 Savings
$200.00 Periodic Obligations (Savings)
$54.00 Electric
$25.00 Telephone
$14.00 Cable
$30.00 Gas
$160.00 Groceries
$99.00 Insurance (auto/apartment)
$300.00 Car Loan
$40.00 Medical
$28.00 Pets
$20.00 World Vision
$15.00 Books/Recordings
$70.00 Computer-Related
$12.00 Office/Postage
$51.00 Dining Out/Lunch
$18.00 Movies/Plays/Concerts
$10.00 Sporting Events
$5.00 ATM Fees
$1,692.00 Payroll
$1,961.00 Expenses/Savings
$(269.00) Surplus, Deficit (===> 0 )

Person #1 is a single person, it looks like, who lives alone probably, has a new car, enjoys sports, and likes to go out, as well as work on the computer. From looking at their expenses, what you do you see missing?

First look at the basics--Food, Shelter, and Clothing. Food is listed, $211.00 total, including dining out. That sounds reasonable so let's leave that the same. Shelter is also reasonable with a $650 payment.

So what's next? Cable, telephone, electric--let's group under utilities for a total of $100.00. Next would be clothing expense. I don't see any listed. So, to be on the safe side, let's add $25 a month for clothing.

What about washing/laundry, and dry cleaning? Let's add $10. What about general house expenses, soap, papertowels, cleaning supplies, sheets, general upkeep? $15 a month.

Next is health. The medical lists as $40 a month. We will leave this amount there. Next would be transportation with gas of $30 a month, insurance of $99 (car, and house), and finally a car payment of $300 a month. These, so far are not really negotiable expenses.

Next we list our other expenses that are more or less unchangeable, ATM expenses, $5 and pet needs of $28.00 Plus we have periodic expenses of $ 160 a month. Adding all of these up we get $1673.00.

So, it looks like we have some decisions to make, because we only have $19 to spend in our other categories of Charity, Computer, Entertainment, Books, and Sports. So, where is this money going to come from?

First of all realize that more income is needed, and thus this person should realize that there is a need to start looking for more avenues to obtain the money, perhaps get a better job, or ask for a promotion, etc. So, let's look back at our list, and see what can be pared down. Is it possible to refinance the car for a lower payment?

Perhaps do with a little less money for food, if we use sales, and eat more casseroles, perhaps we can shave another $20 off the total. Where else can we change? So, this is an incentive to look into refinancing the car, and reviewing the $160 for the periodic obligations. (which in this case turns out to be the required payments to 3 creditors of $50, $60, and $50 each).

The person in this case has decided to do with one credit card, and close the other two. So, he adjusts his payments to $30 each, $60, and $30 respectively. This leaves a total of $50 to be applied towards entertainment. If the car is refinanced this amount might readjusted back upwards.

So, for now we are looking at a new spending plan as follows:

$650.00 Rent
$100.00 Utilities(Electric, telephone, cable)
$194.00 Food (Groceries, and Dinng out)
$25.00 Clothing
$10.00 Laundry, Dry Cleaning
$15.00 General Household
$40.00 Medical
$30.00 Gas
$99.00 Insurance (auto, apt)
$300.00 Car Loan $5.00 Banking Fees
$28.00 Pets
$110.00 Periodic Expenses
$50.00 Entertainment
$25.00 Contingency Fund
$10.00 Miscellaneous
$1,692.00 Payroll
$1,691.00 Expenses/Savings
$1.00 Surplus, Deficit (===> 0 )

As you can see I added in two more important items $25 a month for contingencies (we usually aim for 3 times our monthly expenses as our goal), so this is just a start. And there is also $10 for small emergencies, or things we forgot. If we don't spend it this month, we can add it to the contingency fund. I hope this exercise was helpful to you. Good luck with your new spending plans.