Take a Mountain and Turn it in to Mole Hills
Last month I challenged you to write down any money activity that occurred in your household.
So, what happens now? You have this list of information with little organization that may go on
for pages. Let me show you how to easily take this mountain of information and put it into
simple mole hills, without a lot of work.
Any budget (or spending plan as some call it) can be broken down into a few workable,
meaningful monthly expense categories. Giving (10%), Saving (5-10%), Housing (25-35%),
Transportation (10-15%), Insurance (5%), Household (10-20%), Personal (5-10%), Entertainment (5-15%) and Services (5-15%). Trust me, this is all you need. When I first started budgeting I created almost 100 categories! I was concerned about how I could understand my family’s expenses. It became such a burden to manage that I almost gave up. As I started to trust myself and my spending habits, I realized that fewer categories made it so much easier to manage monthly expenditures. These categories are a great starting point to create your spending mole hills. The percents I’ve listed are guidelines for how much money should be budgeted and spent in each category. Just remember your budget can only add up to 100%!
As you categorize each item on your list, put expenses in the category that is most meaningful
to you. For example, babysitting costs could go under entertainment or services. Once every
expense has been categorized, total the categories, then calculate the percent to total and
compare with the guidelines I’ve listed above. It’s amazing how this exercise will give you a
great picture of how your money is spent. This will reveal where your spending may be out of
Take another month and focus on cutting expenditures in those categories that are out of line.
This way you only need to look at the areas of expense that need attention, not every single
item spent or each category. At the end of the month, do the exercise of adding expenses by
category and calculating the percents. I bet you’ll be surprised at how much progress you’ve