OK. You've gathered all of your spending data, and now we're ready to do the math and see what you spend every month. Remember the eight categories for spending frequencies (from List Item #6)? You should have the totals for (1) Daily, (2), Weekly, (3) Bi-Weekly, etc. If you downloaded our spreadsheet template, you can skip down to the "Note" near the middle of this page after you put your spending habits into the spreadsheet. If you are familiar with spreadsheets, it will be self-explanatory. It has some test values for examples only. If you are unfamiliar with spreadsheets, email us and we can provide some instructions. If you didn't download our spreadsheet template, you will have to do this all by hand. It's not too late to get our template - just download it here. The template will make this much easier to update as you start to trim your expenses in later exercises.
So, you're going to do this by hand (or create your own spreadsheet) then. The following table will show you what you'll need to use as a multiplier for each of the totals in each category. Some of the numbers may look wrong to you, but remember that the monthly totals will be as if all months are 31 days - in order to allow for the most expensive months. Just use the numbers, and it will all work out in the end.
The numbers you came up with will be the monthly amount for each category. Now, total all of the categories in order to get the total expenses for a typical month for your household.
The total is how much it costs you to live - per month, assuming that you make no changes in your lifestyle, and no unforeseen expenses come up. Remember, though, that this only works if you have included every expense for every category. That's why you need to constantly update these figures - there are always expenses that you forget about until they actually come up again. So, be diligent here - always update the numbers and recalculate your monthly totals when you discover new expenses.
Although we'll go into more detail later, it would be wise for you look over each expense now in order to see where the money goes. As an example, let's take one daily expense - such as coffee. We'll assume that you buy just one cup of coffee every time you go out shopping, job hunting, or whatever. Depending on where you buy that cup of coffee, it will cost you between $1.50 and $4.00. At an average of say $2.50 (plus tax) purchased five or six times a week, you will be spending over $600 per year - just for some coffee! The same goes for a soft drink or two a day. Even a pack of gum a day can cost you over $300 per year. Again, here is where a spreadsheet would be handy. You can itemize and categorize to your heart's content and see exactly what you spend and where, and how you can start to trim expenses a little at a time.
But, we're getting ahead of our schedule. One thing at a time. So, now you know what you're spending per month, and where it all goes. You now have a clearer working knowledge of where your money goes than over 90% of the people you know do about their own spending. With this knowledge, you'll be able to see exactly where you currently stand financially. Look over all of this data, then go on to the income side of your current status in Item #8.
Don't forget to make your required job search contacts this week.
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