How to Develop a Living Expenses Worksheet
A living expenses worksheet is an an essential part of a personal or family budget. For proper financial planning, you need to track your living expenses on a worksheet to provide the information needed to establish and modify your household budget.
Other People Are Reading
Instructions
-
-
1
Start by tracking monthly living expenses. Gather up checking account statements and credit card bills. This step is important to understand the living expense categories that need to be addressed in the worksheet. Some of us have monthly child care bills and some don't. Some own their own cars, while others use public transportation. Personalize your living expenses worksheet to meet your lifestyle.
-
2
Start the worksheet with "Needs" and list the categories you have identified as essential to you. These needs are living expenses that are required on a month-to-month basis or needs that occur quarterly or annually but are estimated for a monthly amount. The most common basic needs are home, utilities, insurance for home, car, life and health, transportation, taxes and food. These expenses are considered the essentials without which we cannot live. As a rule of thumb, the monthly needs total about 60 percent of the total monthly take-home pay.
-
-
3
The next step is to categorize "Wants" -- the living expenses that are the nonessentials. These nonessentials differ from person to person but can include gifts, entertainment, eating out, mobile phone, hobbies, travel, clothing and charity, among others. Itemize them on your living expenses worksheet underneath the needs. Remember that these are month-to-month living expenses so there is no need to be too detailed. As a rule of thumb, the wants usually totally 30 percent of the total monthly take-home pay.
-
4
The last step is to itemize "Savings" on the worksheet. Saving money is essential for future planning and building a solid financial foundation for retirement. Also, it is important to save in case emergencies should occur. The most common itemized living expenses for savings include emergency fund, retirement fund and college fund for kids. Usually the savings is 10 percent of the total monthly take-home pay.
-
5
Use the living expenses worksheet to capture the monthly costs in each category. Add up the living expenses. The total monthly planned living expenses should not exceed total monthly take-home pay. Use the sheet to pinpoint areas in which spending adjustments are possible and desirable. Make a budget based on your findings.
-
1
