Step 5

This may take slightly longer than 5 minutes but hopefully not too much longer. Write down your expenses starting with ‘must pay’ expenses or needs such as housing, food, utilities, transportation. Follow this with your discretionary expenses and note down what you typically spend on items such as entertainment or clothing. Some expenses are large and often paid annually, write these down too, noting that they’re annual or irregular.

If you’re not sure what you spend on average on some of these items, a quick review of your bank statement and credit card statements will give you a good idea. Remember, the idea is to write down what you have been spending, not what you think you should be spending 🙂