We have reviewed all family income and carefully accounted for insurance, investment assets, and other assets. Now, it is time to determine the other half of the picture.
Outgoing Money
If you know what you have, you also need to know what is coming in. You need to know how much money is going out. It’s important to understand why money is going out.
- Debts : What do you owe money on?
- Mortgage: How much do you owe? What are the monthly payments? When is this going to get paid off?
- Lines of Credit : do you owe? how much? when will it be paid off?
- Car loan: balance, monthly payments, pay-off date
- Credit Cards : please don’t tell me you are carrying debt here? If you are, you need to have a plan to pay it off. Decide when you will pay it. Calculate how much you’ll have to spend to do it.
- Yearly Large Payments: I lump these into this category
- Taxes on my house
- Car Insurance payment
- House Insurance payment
- Monthly Payments is an interesting section and the meat of figuring out how much money you actually spend. I end up doing some math to determine my “monthly” payments. Some of these I pay bi-weekly since I receive my salary bi-weekly. Some examples for this:
- Electricity
- Mortgage or Apartment Rent
- Heating (oil, gas, whatever)
- Cable TV (or satellite)
- Telephone(s) (Home and/or Cellular)
- Internet access charges
- Charitable Donations
- Life Insurance payments
- Savings or payments to investment vehicles
- Groceries
- Car payments
- My wife asked me to add a section on weekly payments. She wanted to understand what was being spent weekly in the house. The list is mostly the same as the above. However, it is now split by a week-to-week schedule. This schedule can show you at what times of the month you may be spending the most money.
You will have a good feeling now that you have written down all your spending. You will understand how much money you are spending. This is usually the area your Financial Plan must address. You must be brutally honest with yourself in this area. Be frank with whoever reads this report. This honesty is essential if this tool will help you figure out where your finances stand.
The final section will be presented tomorrow. The report’s wrap-up will be discussed. We will also talk about what you should do with it.
Related Posts
- Personal Finance: The Quarterly Status Report
- Personal Finance: The Quarterly Status Report (How)
- Personal Finance: The Quarterly Status Report (What Assets)
- The Quarterly Status Report (What Debts)
- Personal Finance: The Quarterly Status Report (Last Parts)
- Personal Finance: The Quarterly Status Report Wrap Up
If you LIVE in QUicken and don’t carry cash you actually are more able to see where you spend your money, however, you are more likely to spend without thinking, so it is a nasty double edged sword.
Most people who only pay cash, typically stop spending when they run out of cash, but with Interac or credit cards that “hard stop” is not in place.
I used to do something similar to these family finance reports on a sort-of regular basis, but I never had much detail on the items we paid cash for. So, I couldn’t fill out all the information you have, but I found that the amount my wife and I took out in cash was reasonably predictable, and so the exercise was useful to predict our financial future anyway. I guess my method wasn’t so good for identifying things we needed to change.