Step 5: Create a monthly spending plan
Use the Cashflow Statement worksheet to create a budget that you can stick to—and save with—every pay.
Assigning Pay to Expenses
If you get paid more than once per month, the next step is to determine which bills to pay from which pay. Verify the due dates on your bills and plot them on a calendar. Then pay as many bills on time as possible from each pay.
An expense like groceries should be allocated based on pay periods. For example, if your monthly plan is $800 and you’re paid fortnightly on the 1st and 3rd week of the month, you can allocate $400 per pay.
If you and your spouse agree to a cash allowance for personal expenses, use the same process to determine how much cash each person needs for lunches, fuel/fares, personal care items, hairdressing, etc.
Remember, fine-tuning your spending plan is a process. If the plan you put in place for one month doesn’t work, it doesn’t mean you should quit the plan. It means you should continue to tweak the plan and figure out how to make it work to accomplish your goals.
Plus, just doing this exercise will inevitably make you more conscious of how you choose to spend your money and how motivated you are to pay off your debt.