Do the following steps to prepare you for Part 3 (then continue Counting for a few days to make sure it all looks right).
- Read down your category list, looking for any expenses that don’t quite fit. Let’s say you put ‘Dining out’ for both a takeaway meal and a date.
- Strictly speaking, neither of these are ‘dining out’ in intent. One reflects ‘not preparing my own food’, while the other is about ‘looking for a partner’. Going out with friends to try a new restaurant would be a more proper example of ‘dining out’ when we’re talking about why you spent the money on it.
- Therefore, adjust any of the categories you’ve assigned so that what you were trying to do or achieve at the time is more accurately listed.
- Next, cover any annual or quarterly allocations for bills.
- List them in the back of your Counting book in pencil (so you can always add to or change items in this ‘Annuals’ list and recalculate).
- Write the annual amounts in the column next to your listed items.
If you’re not sure of the cost this year, base it on past years and round it up generously. For example, if an annual upgrade or membership was $75 last year, put $100. This will help cover unforeseen expenses, too.
- Add all those together to get the total annual sum.
(Horrifying, isn't it?)
- Write it at the bottom of the column.
- Then divide the total amount by 12 to get the monthly amount you would ideally set aside to cover each of these big bills when they come in.
Say $2400 ÷ 12 = $200.
- Put that figure in this month’s Counting, categorised as “Big-Bills”.
Make sure you are including all this month’s income: tips, commissions, side-business drawings, the lot.
If there are any surprises later, you'll want them to be pleasant!