CHARMING DOESN'T LIVE HERE ANYMOREBy Ginita Wall, CPA, CFP
"Some day, my Prince will come" goes the song. But what if
he came and went -- and took half of everything with him? Thats the dilemma
of the woman on her own again. And once bitten, twice shy, she may not want to rush into a
Most women can expect to spend at least a third of their adult lives on their own. That
means they had better get savvy about saving and budgeting, and do it quick.
Saving sounds simple. Spend less than you make, then put the rest away in smart
investments. But like the standard advice about dieting (eat less and exercise more),
simple advice is deceptively hard to follow. The first step to saving is budgeting.
To diet, before you can cut back, you have to know what you eat. And to begin
budgeting, first you must analyze where your money goes. Use Quicken or another financial
management computer program if you like, or make the calculations by hand.
To do your own calculations, make columns on paper and list at the top of each column
the budget categories that apply to you. Your budget categories might include:
- Credit card payments
- Installment loans
- Personal and beauty care
- Books and magazines
- Hobby expenses
- Savings and investments
To this list add budget categories that are uniquely yours.
Then go through your checkbook for the past year and list each check in its proper
column. Add each column, and you will have a summary of your spending by category for the
If you have kept your credit card bills, put each credit card charge into a category,
instead of lumping your entire payments under "credit card payments." Although
this may, at first glance, seem like a demanding task, you will be surprised to find that
most of your charges fall into just a few major categories, such as dining out, clothing,
and so on, and so the monthly bill can be categorized easily.
Decide where to cut back and which categories you expect will increase. Divide the
revised amounts by twelve to arrive at your preliminary monthly budget.
Adjust and readjust the figures until your monthly budget equals your monthly income.
This may take some doing, but persevere. Be sure you allocate as much as possible to the
category "savings and investments."
If your income doesnt cover your expenses, a budget will force you to make some
hard choices. When you make a budget, you will have to decide what is most important to
you and what you can live without. A budget wont give you more money each month, but
sticking to it will leave you with more at the end of the month.
Each month, tally your checkbook and credit card expenses for each category, just as
you did here for the year. Then prepare a four-column worksheet that lists your budget
categories in the first column, your budgeted expenses in the second column, and your
actual expenses in the third column. In the fourth column compute whether you exceeded
your budget or came in under, with an explanation.
If you consistently exceed your budget, you must adjust your spending habits or find a
way to increase your income so you can accommodate your extra spending.
If full-blown budgeting sounds like too much trouble, you may want to use a shortcut
method to control your expenses. Because some expenses, such as your mortgage payment,
your car payment, most utilities, and even most groceries, are beyond your control, the
shortcut method doesnt focus on them.
Budget only a few categories the ones you can control and analyze your
spending each month for those categories only. Though this method is simpler, be sure you
periodically review all your monthly expenditures to ensure that your total spending
doesnt exceed your income.
Youll find more ways to boost your income and cut expenses at the WIFE.org
Charming Doesn't Live Here
Anymore was written by Ginita
Wall, CPA, CFP