Personal Money Management
Personal Money Management is a plan for managing and spending income. It tells you how much money you have and how much youíve spent. It also tells you how much you can spend in the future. It tells you what you can afford and when you can afford it.

With a personal money management plan:

  • You can plan how to spend your money so that you donít get into financial trouble.
  • You will be in complete control of your money.
  • You will be prepared for emergencies.
  • You can avoid going into serious debt.
  • You will also be providing yourself with economic security and you will have the ability to plan for long-range goals such as buying a car, buying a house, or going on a nice vacation.

    How do I get started?

    There are four steps in developing your Personal Money Management Plan:

      1. Listing your expenses.
      2. Listing your sources of income.
      3. Comparing income and expenses
      4. Setting priorities and making changes so that your income will be greater than your expenses.
    Expenses come in two types: fixed expenses and flexible expenses.

    Fixed expenses are those expenses you must pay the exact amount each time you pay your bills. Flexible expenses are those expenses that you can control, such as the amount of money you spend on eating out or how many movies you rent.

    Figuring out where your money goes each month is probably the hardest part of a money management plan. The best way to know how much money you spend is to keep a record of every transaction. Usually, tracking your spending for quaterly is enough to give you an idea of your monthly expenses. Once you know more about your spending, you probably wonít have to keep such detailed spending records.

    Remember, not all of your expenses are monthly. Property taxes, insurance, holiday and birthday gifts come quarterly or once or twice each year. It is easy to forget about annual expenses and not have enough money to pay for them. A Personal Money Management Plan will help you identify and anticipate these expenses.

    The following are some examples of spending categories:

    HousingInsuranceTransportationSavings and investmentsHealth careDonations
    ClothingFoodEntertainmentPersonal careFamilyEducation
    Professional expensesMiscellaneousCredit payments

    Sources of Income
    Add your current total family income from all sources. Include income from other family members if it is used for family expenses. Remember to use the take-home amount, or what you actually have left to spend after deductions.

    Some sources of income include:

    Earnings from employmentInterest from checking or savings accounts or a credit union.Tips or commissions.Savings and investmentsInterest or dividends.Gifts from family or friends.
    Child support or alimony.Income from inheritances and trusts.Unemployment compensation.Educational scholarships.
    Social Security, pensions, or annuities.Public Assistance.Food Stamps.Veteransí benefits.

    Comparing Income and Expenses
    Add your expenses and compare the total to your current income. Are your expenses more or less than your income? If they are more, what can you do to bring your expenses in line with your income?

    Setting priorities and making changes is a continuous process meaning that as your life circumstances change, so should your money management plan. But this is a good starting point to begin to think about your goals for the future, including your financial goals.

    Goals provide focus, purpose, vision, and direction for your life and your money management plan. If you have children, think about involving them in the process of thinking about and deciding which goals are important for your family and the ways in which they can help the family achieve those goals. With the entire family supportive of both long- and short-term goals, it will be much easier to be successful in reaching your goals!


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