It’s time to roll up your sleeves and get to work in Step 3. If you’ve already gathered your financial information such as pay cheques, bank and credit card statements you’re all set. If you haven’t, now’s the time to do it.

If you’re comfortable using Excel then it will make calculations easier but I often gravitate towards pen, paper and a calculator. Whatever works for you. Essentially there are 5 categories to complete:

1. Monthly net income (after taxes and deductions)
2. Regular monthly expenses (even if they’re not exactly the same every month, things like food, transportation and utility bills are surprisingly similar each month)
3. Typical monthly spending on wants – entertainment, lifestyle and clothing
4. Large annual expenses including vacations – add them up and divide by 12
5. Savings and goals – use a monthly amount for each one

Put #1 in big numbers at the top of a page and then put the totals for 2, 3, 4 and 5 below. Starting with #1, subtract the totals for expenses and savings one by one. Is there enough monthly income to cover all of them? If not, how much do you need? 

We’ll take a look at how to use the numbers to make a plan to help you achieve your goals.