Personal Finance for Moms- Understanding Expenses

Now that you have a good understanding of where your family's money comes from and where it is deposited, it's time to look at expenses. In my experience, this is the area where most moms tend to really shine.

There are so many great blogs devoted to minimizing family expenses and being really creative to create the best quality of life for your family with the least amount of expense possible.

With that being said, there are some areas of expense that you probably can't eliminate completely!

Let's review and assess those necessities:

- Housing: Do you rent or own? What is your monthly cost for rent/mortgage/homeowner's or renter's insurance?

- Transportation: Do you have car loans? What are the monthly payments and remaining balances? If you use public transportation, what is your average bi-weekly or monthly cost?

- Fixed Expenses: Each month, you probably have to pay for electricity, gas, water, trash collection, etc. What are the average expense each month? (You may want to consider some of these on a quarterly rather than monthly basis if your home's bills vary greatly throughout the year due to weather.)

- Food: If you don't track your food/dining expenses, it can be really eye-opening to realize how much money goes toward feeding ourselves! Capture your expenses for food, including groceries and dining.

- Flexible Expenses: Do you have cable, cell phone, home phone? What is the monthly cost for these services?

- Child Care / activities: What are your costs for day care, school, or activities that your children participate in?

- Credit Cards/other debt: Debt reduction is chronicled in detail on many blogs, and Dave Ramsey is probably the best starting point if you are trying to pay down debt. For the purposes of understanding your family's expenses, know what your total debt is and what you are spending per month to reduce it.


These are the most common expenses, and your family may have some or all of these. You might also have some that aren't listed. What other expenses does your family incur on a monthly basis?


Action Plan:
- Review each type of expense with your spouse to get an understanding of average monthly payments
- Understand how and when each expense is paid from the family income. Do you use automatic drafts or write checks manually? Are bills paid by credit card?
- Determine where, if anywhere, you can reduce the amount of your expenses
- Subtract expenses from income and determine whether you can meet your monthly needs and obligations without incurring more debt.

Next in this series, what to do if expenses exceed income.

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