Analyzing Spending: Step Three to Fixing Family Financial Problems

Because financial struggles are a common source of marital discord addressing financial issues will not only help your family economically, but can also keep your marriage on the right track.  The best approach involves confronting financial problems head-on together with your spouse, getting your mind right about establishing a spending plan, tracking spending for a month, and organizing spending into meaningful categories.  [See links to previous articles at the end of this post.]  The next step to fixing your family financial problems is to analyze your spending.  There are a few important things you need to know that will help you through this process.

Figure your spendable income.  One of the first things you need to do is to determine how much money you actually have to spend each month.  It's surprising how many couples don't know the precise amount!  First, add up all sources of income - salary or regular paychecks, interest, dividends, and any other incoming funds you may generate.  This is your gross income.  Next, subtract ten percent of your gross income which will be your tithe unto the Lord as the Bible instructs.  Finally, subtract the amount deducted or set aside for taxes - be sure to include all taxes (federal, state, FICA, etc.).  [Note: Do not subtract insurance and other deductions at this point.  These items belong in other spending categories.]  The resulting amount is you net spendable income - the amount you actually have to work with each month.

Deduct your spending.  You should already know how much you spent for the month and what you have spent it on from completing the two previous steps (tracking spending and establishing spending categories).  Every single expense should be accounted for in some category, even if it is "miscellaneous".  You should now subtract each spending category from your net spendable income.  The result will either be a surplus or a deficit.  Many people are surprised to find out that they are actually operating in deficit spending.  They either cover the shortfall by paying for items with credit cards, or they hold off on paying for certain bills until the next paycheck which puts them further and further behind each month.  At any rate, maximizing your surplus is a primary goal of your budget.

Distinguish fixed and flexible expensesFixed expenses are those that are stable or constant.  Examples include your mortgage or rent, car payment, insurance, utilities, and others.  Flexible expenses are those in which you have more choices and options regarding how much is spent.  Examples include entertainment, recreation, clothing, gifts, and others.  If your flexible expenses are too high, you may be able to identify ways alter or avoid some of them to reduce spending.  If your fixed expenses are determined to be unmanageable, then drastic measures may be in order.

Review and compare guideline budgets.  Guideline budgets are examples or standards of reasonable budgets for various income levels and family sizes.  The purpose is to have a point of comparison between your current expenses in each budget category and an established, realistic amount to be allocated to each category.  This will help you identify areas of overspending to consider when establishing your own budget later.

Various resources and online tools are available to help with all of the above steps.  These are easy to find by doing a simple web search.  One recommended source of such tools is Crown Financial Ministries (  In fact, they have several free forms that will guide help you immensely.  [Suggested forms for this step include "Percentage Guides", "Monthly Income and Expenses", and "Budget Analysis Form".]

Articles in this series...

--- Introduction
(1) Track all spending daily for a month
(2) Organize spending into meaningful categories
(3) Analyze your spending
(4) Establish a spending plan (budget)
(5) Work your plan
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