5 steps to create your monthly expense list

If you’re revving up to pursue your passion, managing a monthly expense list is paramount to making informed decisions for financial security. Don’t guess with your money, your life vision, your business, or your passion. In this article I’ll explain an easy way to make your monthly expense list. Then you can determine your monthly spend, or the amount of money you expect to spend each month. Once you know your monthly spend, you can use it to determine your personal reserve (more on that in the last post).

The more you know all of the concrete, factual numbers that represent your financial standing, the more intentional you can become about what you think and how you feel about money. This is one of the first steps to financial freedom and feeling better about money, which let’s be honest, who doesn’t want that?

One of the most important data points you need to know about managing your personal finances and business finances is how much money you spend on a monthly basis. If you think you might spend about $2,000 each month, that is not a data point. An approximation or guess of what you spend each month is just a thought, not a fact. Practicing awareness over differentiating facts from thoughts is key to unlocking financial freedom and success.

Your brain might tell you that it’s not possible to figure out your exact monthly spend. For example, your brain may offer you the excuse that your monthly expenses vary. That’s expected. If that happens, your brain is functionally absolutely normally. Don’t let these thoughts stop you from beginning this process.

Ideally in the future you will know how your monthly spend changes month to month and even seasonally perhaps, but for now, you just need a starting point. So notice if you have any thoughts that make you feel resistant towards the idea of discovering the facts of your finances. Let those thoughts be there, and figure out the facts anyway. Otherwise you’ll continue making important life decisions about when to pursue your passion, start your business, or quit your day job based on thoughts and feelings instead of data. If you’ve lost your job or unexpectedly had a change in your financial position, this becomes even more important.

Before you calculate out your exact monthly spend, let’s define three common types of expenses to consider.

  • Fixed Expenses – These are the payments you make each month that don’t change, like your mortgage or rent, phone bills, insurance, and steady utilities, like recycling.
  • Variable Expenses – This includes groceries, gas, and varying utilities like electricity. Any cost that occurs every month in a different amount.
  • Amortized Expenses – These costs don’t necessarily happen every month but you need to account for them monthly to come up with your monthly expenses. For example, you may spend $300 on clothes every 6 months. To figure your monthly expenses, you would average these costs over time, meaning you’d budget $50 per month for clothes. $300 ÷ 6 months = $50 per month.

You can accurately determine your monthly expenses by following these five steps on paper or input them directly into a spreadsheet like the free template provided below to make this process even faster and easier. Make a copy of the Google Sheet then edit expense categories as needed.

Remember to make a copy of the Google Sheet before editing!

5 Steps to Create Your Monthly Expense List

  1. List fixed expenses. Consider all of your expenditures from the last complete month. Make a list of each item you spent money on starting with all of your fixed expenses. You can do this on paper or add rows to the template linked above to customize the sheet for your personal expenses. 
    1. Record the amount spent next to each itemized fixed expense.
  2. List variable expenses and dollars spent. List each item you spent money on last month that was a variable expense. Record the amount spent next to each itemized variable expense.
  3. List amortized expenses and dollars spent. List each item you spent money on in the last 6 months that would be considered an amortized expense. 
  4. Calculate monthly budget for amortized expenses. Next to each amortized expense divide by how often you pay for that item. For example, if you pay $600 for auto insurance every six months, you’d write $100 as your amortized expense each month for auto insurance.
  5. If you did the steps above on paper, now input the items and the exact amount spent into the template above or any spreadsheet to summate the expenses.

Your monthly spend is the sum of the itemized expenses in your monthly expense list. Viola!

If you make all of your purchases on debit or credit cards, you should be able to see your expenses online pretty easily. If you make most of your purchases in cash, you might have receipts but if you’re anything like me those are long gone. If you have no record of how much money you spend each month, how much money you spent last month, or where to look for this data, then it’s hard to believe you’re living in 2020 reading this online. But if you insist, then I recommend you track and record all of your expenditures for the next 30 days. Start today. The data you collect will be eye-opening.

Make this process quick and easy by using the free monthly expense list template google sheet provided HERE. The first five people to download the template and subscribe will receive a free 30-minute consultation to set up the monthly expense list google sheet and calculate your *real* monthly expenses!

The keys to your financial success are in your hands. If you’re ready to jumpstart your journey today contact me for one-on-one consulting. We’ll figure out the facts of your finances and fast track you to your goals.

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