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Show Four basic steps for spending plan By JOANN MATHIS ROSS Extension Home Economist USU Extension Service Davis County There are four basic steps in setting set-ting up a spending plan. Following these steps will give you a beginning beginn-ing spending plan to work with. Assume that it will not be perfect Allow a number of months to refine it and make it more workable. To create your spending plan, begin by calculating your total income. in-come. Include wages, salaries, commissions, interest from savings, stock dividends, rents, alimony, child support payments, bonuses, etc. If income is received on an irregular ir-regular basis, calculate the amount of income and the period of time it will need to cover. Develop a system that will allow the money to be allocated over that period of time. If income varies drastically throughout the year, financial planning plan-ning should be done using the lowest anticipated income figure. Any income above that level can then be used for specific needs, goals or luxury purposes. Next, estimate where your money is going now. How much are you spending on food? Housing? Clothing? Installment debt payments? How much is slipping through the cracks? Knowing what you have spent in the past allows you to make realistic plans for the future. If you have no record of past expenses, begin recording everything every-thing that is spent for one to two months. Use these figures to estimate future expenses. Then compare income to expenses. ex-penses. Do they match? If you are satisfied with what your dollars have given your family in the past, allow similar amounts in the future. If you are not satisfied, look at your spending critically. Studying records may reveal poor buying habits or areas of overspending that you would like to change. Work with expenses until they balance with income. The last step is to put your new spending plan into action. Try it out. Keep track of expenses. Then evaluate how realistic your estimates were. Make adjustments if necessary and use it for another month. Continue refining your spending plan until it is working welL Resource: Successful Money Management (EC 428.1-4) by Barbara Bar-bara Rowe with Kay W. Hansen and Marsha M. Peterson, Utah State University Cooperative Extension Service, November 1990. |
