An important part of financial stability, no matter who you are, comparing your total spending versus income for your household allows you to take control of your financial situation. In order to show you how you can get a handle on your money, here are a few steps to get you on your way.
Start off by grabbing some stationary- pen, pencil, paper pad and calculator- and setting up an area to work.
Gather together all your slips, receipts and needed financial information:
Gathering this information from both yourself and your spouse allows you to have a clear and concise image of your household spend over the course of the year. All the better for comparing your spending to your income.
Creating categories to divide your expenses into also allows you to accurately compare spending versus income. Breaking these into three categories is advisable, however you can go further if your expenses require it. We have divided them up as follows:
Calculate the total amount for your debt and living expenses that must be paid annually, for both you and your spouse. Compare your spending versus income to get an over all idea of where your financial stability stands.
These expenses are ones that should be minimized as soon as possible or when you can go without them. For a month, you and your spouse must record every cash, debit or credit spend on nonessential items. Once a month has been recorded, times it by 12 to get a rough annual estimate.
Once you have a good, clear outline of your expenses, you can compare them to your overall income to see how much you are saving and where you could improve your spending. Often nonessential items can be cut down and the funds shifted to get more bang for your buck.