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Create a form to track money in and money out. You can use a ruler and paper, make your own Excel spread sheet, or use one of several online money tracking programs. You can also ask your bankruptcy trustee (who is also an experienced financial consultant) for a tracking template.
Here are the basic divisions most people need to keep track of:
- Monthly after-tax income - what you’ll use to save and spend
- Savings - ideally 10% of your income right off the top
- Fixed expenses - rent/mortgage, insurance, car lease, some utilities that are the same amount every month, child support, gym fees, etc.
- Regular expenses – things you spend money on every month, but not always the same amount such as gas, groceries, grooming, phone bill, gas, hydro, eating out, movies, cigarettes, entertainment, clothes, alternative health therapies, etc.
- Irregular expenses – things you can expect to spend money on in a given year like trips to the dentist, school fees, text books, vacations, car / home repairs, birthday, wedding, and holiday gifts, etc.
Monthly Income
If you have a regular pay check, then this will be easy to track. Don’t forget to add tax rebates, any part-time income, gifts of money, etc., to the total.
Savings
You should have two types of long-term savings:
1. Your life goals account that will build housing, retirement, and education funds.
2. Your emergency savings, which will build up until you have 3-6 months worth of living expenses that can be used in the case of an unexpected drop in income through job loss or medical issues.
Fixed Expenses
This is pretty straightforward. List the monthly expenses that stay the same. These include:
- Rent / mortgage
- Property taxes
- Insurance (car, home, renters, health, dental, life, injury, etc.)
- Utilities such as cable, basic phone, internet, garbage fees, and so forth
- Alimony or child support
- Car payments
- Child care fees
- School / tuition fees
- Minimum payments on any loans you may have (although you probably won’t have any immediately after bankruptcy discharge).
Regular Expenses
Every month you spend money of both necessities and discretionary choices. Another way of looking at this is needs and wants.
It’s unrealistic to expect that you are suddenly going to give up all your discretionary spending and start saving. It’s a rare person who can manage that trick. Instead, collect receipts for EVERY expenditure and record them. At the end of a month you will be able to see if you are spending more than you earn. If this is the case you need to spend less or earn more, otherwise you’ll eventually be looking at bankruptcy all over again.
Regular expenses that vary by the month include discretionary and non-discretionary spending. With discretionary spending, you have a choice as to how much you spend, whereas something like hydro is pretty much non-discretionary. You might save a little by remembering to turn out lights, but the bill will rise and fall by seasonal use and kilowatt hour costs, for example.
Non-discretionary costs that fluctuate might include:
- Hydro
- Gas
- Water and Sewer
- Medical prescriptions
Regular costs that you can choose to spend more money or less money on include things like:
- Groceries
- Clothing
- Grooming
- Fun (movies, restaurants, alcohol, sporting events, concerts, dating, impulse buys, etc.)
- Taxis
- Cigarettes
- Coffee habit
- Fast food meals and snacks
Irregular Expenses
These are expenses that come up a few times a year. Try and figure out how much you’ll need to spend on them over the year and then set aside a monthly amount for each of these areas. You can use the actual jar/envelope system, or you can open another savings account and make a deposit into it every time you get paid that covers the monthly total for all these items. You may want to include things like:
- Vacations
- Christmas and Birthday gifts
- Big ticket items (furniture, TV, laptop, new washing machine, canoe, ski equipment, etc.)
- Car Repairs (budget more if you have an old car, for example)
- Dental, if you don’t have coverage through work
- Tuition and text books
IN THIS SECTION
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