How to Separate Your Expenses and Create a Budget
October 21
Category: Playbook
Start with the Real Problem
Clients often ask, “How can we separate our expenses and learn how to create a budget?”
The best way to tackle this is to start by identifying the real problem. Is it our income? Is it the budget itself? Usually, neither is the issue. Instead, it’s about the choices we make every day.
So, slow down. Give yourself time. Allow plenty of wiggle room in your planning.
To build an accurate budget and understand where your hard-earned money goes, you need to gather information. Think of this as a battle you won’t win completely—but one you can learn to manage.
After all, making and spending money never ends. But you can control your spending habits. That’s the only way to achieve lasting financial stability.
Fixed and Variable Expenses: What’s the Difference?
To begin budgeting, you need to understand where your money goes. All expenses fall into two main categories: fixed and variable.
What Are Fixed Expenses?
Fixed expenses stay the same every month. They’re easy to identify because they come in the form of bills or regular payments. Common examples include:
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Rent or mortgage payments
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Credit card minimum payments
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Loan installments
You can find these by checking:
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Your checkbook or bank statements
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Mortgage or rent documents
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Monthly loan or credit card statements
What Are Variable Expenses?
Variable expenses change from month to month. Examples include:
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Groceries
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Clothing
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Utilities
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Gasoline
These are the items you often have more control over. For instance, you don’t need to buy clothes every month. And while heating bills are higher in winter, you can estimate the average.
One effective method is tracking your spending for a month or longer. Record everything under categories like food, gas, and utilities.
Some people even carry a small notebook to write down every expense. Yes, it takes effort. But those small, forgotten purchases add up fast.
You can also get an idea of your variable spending by reviewing:
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Utility bills
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Receipts
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Past bank statements
Where Does All the Money Go?
Taking time to sit and review your spending might not seem urgent. However, it’s the only way to make your budget work. Knowing exactly where your money goes each week, month, and year helps you stay on track.
So, review your budget monthly. Ask yourself:
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Have any fixed expenses changed?
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Are your estimates for variable expenses still realistic?
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Have your goals shifted?
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Did your salary or bonuses increase?
Update your budget accordingly. Most importantly, avoid reacting to financial setbacks with quick-fix decisions. Don’t jump from one bad money move to another.
Instead, work your way out slowly. One day, one week, one month, or even one year at a time. That’s how you truly learn to manage your money wisely.