Relationship admin  

What are the general expenses of your household?

The first question I ask any business owner is, “What is your overall cost?” Most business owners know this answer. If you asked someone on the street about their general household expenses, they would receive a blank stare.

What are the general expenses of your household? The term “overhead” gets thrown around a lot in business. General expenses are the daily cost and the monthly/annual cost of operating your home. You’d be surprised how many people don’t know what it costs to “operate” their home. They think they know until they actually put pencil to paper and write down all the costs. They are usually very surprised at how much money is actually wasted and where it all goes. And it goes pretty fast.

Just as business owners know their overhead, the same should be true for those who run a home. And we all operate a household, whether it’s one person or a family of four. You need to operate your home as a business, therefore you need to know how much it costs to operate your home.

So let’s put paper to pencil. You need to know what you spend on the following:

Grocery and restaurant shopping: This includes weekly grocery shopping, eating out, takeout (pizza night, Chinese food night, etc.), convenience stops at local supermarket, WAWA, 7-11, Circle K , Starbucks, Dunkin Donuts, local bagel shop, etc.

Automotive Costs

– Monthly car payment

– Gas and oil (buying the cheapest gasoline for your car is not the best decision. Sometimes cheaper gasoline can cause problems for our cars and, in the long run, it will cost you more).

– Oil change (It is true that you should change the oil every 3000 miles. It will make your car last longer).

– Repairs (should save $20-25 per paycheck for repairs)

– Parking lot

– Public transport

Housing/shelter costs

– Mortgage/Rent (if you are paying a mortgage, some people take advantage of bi-monthly payment. Bi-monthly payment means that your mortgage company splits your monthly payment in half and automatically withdraws the payment twice a month. This determines to be one additional payment per year and in turn could shorten the life of your mortgage loan from 30 years to 21-22 years, CDs, etc.)

– Property taxes

– Services (Electricity, Water, Sewage, Gas, Garbage)

– Phone (many people are considering ditching their landline phone. This might be a good idea. If you don’t have your own business yet (and hopefully soon), why have more than one phone?

-Security alarm

– Repairs

Personal Costs

– Haircuts

– toiletries

– Dirty clothes

– dry cleaning

– Childcare

– Gifts given

– Child benefit

– Clothing

– Vitamins/Supplements

loans

– Renewable charges, i.e. department store charges

– Student loan payments

– Alimony

Insurance

– Health (add this to your budget even if your employer automatically deducts it from your paycheck)

– Mortgage Insurance (PMI-Private Mortgage Insurance)

– Renters insurance (I always recommend buying renters insurance. It’s very affordable).

– Disability

-Life

– Long-term medical care

– Automotive

Entertainment

– Concerts/Movies/DVD rental

-Books

– hobbies

– Memberships/Expires

– Holidays

– Subscriptions

-Toys

– Cable TV

Miscellaneous

– Medical copays/coinsurance

– Odontology

– Vision

– Regulation

– Counter

– Lawyer

– Bank charges

– Educational Costs

– Shipping costs

– Any other expenses

investment

– Personal savings

– 401K

-Charities

– Stocks/Bonds/Mutual Funds

Now that you have a budget outline, you need to complete this form over a 3-month period. The reason for a 3 month period is because a one month snapshot is not enough for proper analysis.

After your 3-month analysis, you will be able to see where you spend your money and the cost of operating your home and lifestyle, thus your personal lifestyle overhead. Armed with this information, you’ll be able to make changes and hopefully start saving more and spending smarter.

Please keep in mind just like in business life changes. Sometimes the change is slow (paying off your school loan) or sometimes fast (getting sick and needing your appendix removed right away). One should prepare for these changes as best as one can and one way is to save money in your bank, envelope, jar, etc. for the little “Uh-oh’s” of life.

It’s easier than you think to maintain/analyze your overhead. There are many computer programs that will do this for you. One such program is Quicken. There are many others. It will make your life (and your accountant’s) much easier. You can get more information at www.frompaintopersonalgain.com

I hope you have enjoyed this article.

Here is your health, wealth and happiness!

Leave A Comment