You might have some questions on what category each bill falls into. Your cell phone would most likely be a utility expense, as well as your cable and internet bills, unless you consider those recreational expenses.
If you add up all these percentages you’ll get 114%, so clearly the experts are assuming you have most of these expenses but not all. So you’ll have to juggle the numbers around to fit your needs. These percentages won’t include all of your spending either, like the wedding present you had to buy for your cousin or the emergency new tire you needed when you got your flat. This means random expenses will either have to come from your savings or you’ll need to reduce one of the other spending categories, such as reducing your food expenses by eating out less.
Step 3: Rearrange your spending and eliminate splurges
So what happens if you find out that your rent accounts for 50% of your income or you discovered that your credit card bill is taking up more income than your food and clothing expenses? Well, over time, you’re going to have to make some changes. You may need to ride out your current lease and spend only the bare minimum on food, recreation and clothing until then. For other expenses, a little research can do a world of good.
Try calling your cable and internet provider to negotiate a lower rate. If you have one credit card that you’ve had for a while, and are pretty responsible with making the minimum payment each month, give them a call and ask for a reduced finance percentage. You probably won’t miss your daily $4.00 caffeine and sugar kick if you pack a drink or make coffee at home instead. If you eat out too much and can’t see yourself hard at work in the kitchen every evening, consider ordering from a pre-prepared meal service, which is usually much cheaper (and healthier!) than carry-out.
Now sit back and watch your bank account grow!
This post was updated April 2, 2013.