FLM Step 19: Money coach on the proper way to handle your finances

In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness–one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, the Money Coach Brad Hawkins discusses identifying expenses.

As you begin, be encouraged that you are opening the door to a new financial life. To accurately handle your finances you need a detailed budget or spending plan. A spending plan will determine how much money will go to what expenses. Within a spending plan you have four basic elements: Income, Fixed Expenses, Variable Expenses and, most importantly, Periodic Expenses.

Income The goal of successful budgeting is learning to live within your means. Your “means” is your income - the money that comes into your household. Review your bank deposit statements, pay stubs and find your income.

Fixed Expenses Every month you have costs that do not change such as mortgage, rent, car loans and insurance premiums. These are fixed expenses. Go through your payment records to see what you have paid as fixed expenses over the last couple of months. This will remind you of your spending patterns. List them on the budget form.

Variable Expenses These are handled similarly to fixed expenses. Find your variable expenses (grocery, eating out and personal items) and list them on the budget form.

Periodic Expenses You should establish how much money you will need to put away each month to cover your periodic expenses. You plan for these “almost certain” costs by adding the amount for each item you will “more than likely owe” and dividing that total by twelve (months) to get the monthly periodic expense amount.

Adjust your budget when you find you are spending more than your income. A good budget takes three-to-six-months of adjusting to be accurate and work properly. Another important item is TRACKING. A BUDGET WILL NEVER WORK IF TRACKING DOES NOT ACCOMPANY IT.

We have a tendency to view money and money management as an isolated and independent part of our lives. This mindset is one of the most common causes of financial failure. Most of us react toward money based on emotions, erroneous beliefs, and improper behaviors.

iMoneyCoach.com offers a ten-course training system that will help you maximize your future finances.


Kim McGrigg is the former Manager of Community and Media Relations for MMI.

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