Know Your Expenses [Free Worksheet]

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A big step towards getting a handle on your budget is knowing your expenses.

“Just make a budget” – that’s the advice you’ve probably heard. It’s the first step financial experts say you’re supposed to take. (Nevermind that most traditional budgets don’t work.)

It sounds so easy and yet, it’s just not.

My mom would sit at our dining room table with a legal pad, a pen, a calculator and a stack of bills (this was before computers and budgeting apps) and I would watch as she tried, sometimes for hours, to get a handle on where her money was going. She had a good job, was smart and worked hard… yet her efforts seemed futile. She is the reason I do what I do.

Let’s see if I can’t break this down into steps that actually work for you. You ready?

When you think of your “monthly expenses”, chances are you think of your bills – the things that happen every month and likely have a due date. We call these your fixed & recurring expenses (we’re not the most creative at naming things) and includes things like your rent or mortgage, car payment, cell phone bill, a utility bill, Netflix subscription, etc. Things that happen every month, usually on a set date and typically for the same dollar amount.

It makes sense to me that this is what you think about when it comes to your expenses because they’re the easiest to identify and remember.

Unfortunately, that’s just one out of three categories of your expenses that you’ll need to know when creating your budget.

So the bad news? There are two more categories of expenses.

The good news? We are going to make them resemble this fixed and recurring category because like I said, these tend to be the easiest to identify and remember. So by making the other two types of expenses look and act like this type, your budget will come together quickly.

Know Your Expenses

To make thinking about your expenses easy, we look at one thing and one thing only: the timing of the expense.

If you were to fill out a “monthly budget” today, chances are it’s organized by “area of life.” You’ll see a “Housing” section where you put your rent or mortgage, utilities, home repairs, and maybe services like a landscaper, housekeeper or pool cleaner.

Then you’ll see a “Transportation” section where you put your car payments, gas, insurance, and repairs.

And so on and so on.

Instead, a much better way, is to think about your expenses and categorize them by the timing of how they happen naturally. That way, once you identify them, you can put some simple changes in place to help you manage them based on this timing.

These categories represent what most peoples’ finances look like. There’s money going out at all different times and for different amounts. Chances are, it feels a bit chaotic, which is one of the reasons most people are just “winging it” when it comes to their money and how they manage it.

Getting organized by the timing of how expenses happen is the first step is unraveling this chaos and gaining control of it.

Category 1: Fixed and Recurring Expenses

Your first category are your fixed and recurring expenses. Think of these as your bills. They happen monthly, typically on a certain day or date and for a certain amount.

Examples

Most common expenses for this category are your actual bills: Rent/Mortgage, internet, subscription, car payment, etc but there are other expenses that go into this category that may or may not apply to you specifically.

If you pay something like daycare every Monday – this happens monthly, on a set date and probably for a set amount.

If you pay a housekeeper monthly but sometimes they come in the 3rd week of the month and other times it’s the 4th week of the month, this is still a fixed and recurring expense – happens monthly, on a set dateish and probably for a set amount.

If your electric bill fluctuates from one month to the next, it’s still a fixed and recurring expense because you can likely foresee the change. Here in Phoenix, we run our A/C all summer long so our electric bills are higher in the summer. This expense happens monthly, on a set date and probably for a set amountish.

Note: A bill doesn’t have to be the exact amount every month to count. And a bill doesn’t have to happen only once per month to count (it could be paid weekly or bi-weekly).

Category 2: Day-to-Day Expenses

Your second category are your day-to-day expenses. The easiest way to think about these expenses is that they happen monthly, but when they occur during the month and their amount aren’t as predictable as your fixed and recurring expenses. 

Examples

Most common expenses for this category are things you probably swipe a debit or credit card for such as groceries, gas, and eating out but there are other expenses that go into this category that may or may not apply to you specifically. 

If you give your kids spending money for things like going to the movies or out with their friends – it happens frequently but is random in timing and amount. 

If you pick up pet food or toiletries such as laundry detergent and paper towel when you’re out shopping – these are day-to-day expenses. 

If on your way to work or school you sometimes grab a coffee, that’s a day-to-day expense.

Category 3: Non-Recurring or Random Expenses

Your third category are your non-recurring or random expenses (we call these your whammies). The easiest way to think about these expenses is that they don’t happen every month and when they happen, they tend to happen big.  

Examples

Most common expenses for this category are things that cause you the most stress because you’re never quite prepared for them and they likely go on a credit card or, if you have savings, you pull from it to cover these expenses. Think of car repairs, travel, and gifts. The key is whether or not the expense occurs monthly.

We call these “whammies” even though the expense can be for something fun – like a family vacation or some new clothes.

If you have a bill that you pay once per year (like car registration) – although it’s technically a bill, it doesn’t happen monthly.

If you pay your car insurance semi-annually, you have five months with no expense then a big hit in the sixth month. 

Most of us don’t spend the same amount on clothes each month – we’ll go months without buying anything new then need to buy a bunch of things at once.

Your first step to creating a successful plan for your money is to think about your expenses based on these three categories and the timing of expenses.

Personalized For You Financial Strategies

You and your lifestyle are unique. There’s no one else like you. So let’s look at a few more examples.

Coffee: If you get a coffee on your way to work some or most days this is a day-to-day expense (category 2). You’re probably swiping your debit or credit card real time so there’s a ping-ping-ping of activity going on. However, if instead you load a Starbucks card once per month on a set schedule, it’s now a fixed and recurring expense (category 1).

Haircuts: If you get a haircut every few weeks, this is a day-to-day expense (category 2). However, if you’re like me and go every six month and get your hair cut and colored, this is a non-recurring expense (category 3).

Pet or Toiletries: If you pick up pet food or toiletries such as laundry detergent and paper towel when you’re out shopping, these are day-to-day expenses (category 2). But if you use something like Chewy.com to get your dog food on a monthly subscription, this would be a fixed and recurring expense (category 1) instead.

Insurance: If you pay your car insurance monthly, this is a fixed and recurring expense (category 1). But if you pay it quarterly, semi-annually or annually, that is a non-recurring and random expense (category 3).

A particular expense can actually be in both categories on your budget.

Kids sports: Let’s say your daughter does dance and you pay a set amount on the 1st of the month for the lessons. That expense would be listed under category 1 because it’s fixed and recurring. In addition to that, let’s say once per year you also pay for the recital – the costume, flowers, tickets – that portion would be a non-recurring and random expense (category 3) because it doesn’t happen monthly.

Note: That the actual expense doesn’t determine the category, only the timing of the expense is what matters.

The only thing a standard monthly budgeting worksheet is good for is helping you to get organized initially. You’ll want one that is thorough and lists a lot of different expenses so it jogs your memory.

You can download ours by clicking here.

We have found it’s easiest and fastest to add your expenses to the worksheet first, then go through and color code them based on the three categories you see below. Feel free to add, remove or edit names of expenses on the worksheet to fit you and your life.

Once your expenses are broken up by category, it’s easy to put specific changes in place to manage each one easily and effectively.

To get control of your money, it’s so much more than just making a list of your expenses (all that a typical budgeting worksheet really is). You want to actually manage each of your expense categories in a very specific way.

Once you KNOW your numbers, you can MANAGE your money. That’s your next step! Each of these categories will be managed in a specific way based on their timing. In other words, you will manage each one based on how they happen because that’s the part that causes the most confusion and overwhelm.

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