How to forecast expenses - Tilted Forum Project Discussion Community

98MustGT · 07-22-2004, 12:15 PM

How is the best way to project income and expenses. It seems we are good at getting historical data online however projecting ahead to see if we can afford stuff causes many problems with me and the spouse. She is quite optimistic about things then we get bit in the butt!

hrdwareguy · 07-22-2004, 02:11 PM

First you have to look at the historical data to see where you are. Typically, income won't change often. About the only time it will is when you get a raise or change jobs.

Once you have your income figured, look at all your static expenses. Rent/mortgage, insurance, car payments, utilities. These are your fixed costs.

Subtract your fixed costs from income. Then start trying to put some reason to your variable costs. Extra spending money, gas money, groceries. Try and average these out over a period of time. Subtract these from the above amount. The left over amount is disposable income. This is what you have to spend on other variable or fixed cost items.

As for forcasting, you will have to know things like do you get an annual raise of a certain percentage and figure that in. When looking at new job opportunities, if you know what you will be making, you can figure that in.

Good luck, I've done this a few times at my house. Even though I do this, still seems like we get bit in the butt every so often as well.

Rodney · 07-22-2004, 04:57 PM

Just to add to what hrdwareguy said, here are other things to look at when looking at variable costs: car repair, tires, plumbing and home and appliance repair, appliance replacement, clothing, vet bills (if you have animals), out-of-pocket medical bills, and so on. You should even budget for things that you don't need now but know you will need in a few years, so you can put money aside in a separate bucket in advance.

hrdwareguy · 07-23-2004, 05:13 AM

Good advice Rodney.

I was listening to a financial advisor on the radio one day and she said that you should have about $1000 in a savings account for just such thing.

Shit happens and stuff has to be fixed.

Cynthetiq · 07-23-2004, 06:52 PM

and to continue...

once you know your monthly expenses, you then try to save 3-6 months of expenses into some savings so that you can deal with layoffs, sudden illness, or some sort of unemployment cushion.

good luck!

ibis · 08-05-2004, 06:23 PM

I'm really anal about budgeting. Here's an example:

I figured out my Transportation expenses yesterday:

Fixed costs:
Insurance: $1116 / yr.
Registration: $55 / yr.
Inspection: $12 / yr.
Total: $1183 / yr. or $99 / month

Varible Costs:
Oil changes: $35 per 4500 miles or 0.007777... per mile.
Transmission oil change: $55 per 5000 miles or $0.011 per mile.
Tires: $360 per 60,000 miles or $0.006 per mile.
General mataince: $7 every 100 miles or 0.07 per mile.

I drive about 400 miles a month so that's about $38 per month in varible costs.

Grand total: $137 a month or $68.5 per paycheck.

If you're interedted in doing it like I do, grab yourself a Managerial Accounting textbook and learn about activity based costing.

Sorry for all that... I know I'm anal... I just don't like surprises.

07-22-2004, 12:15 PM	#1 (permalink)
98MustGT Crazy Location: San Diego	How to forecast expenses How is the best way to project income and expenses. It seems we are good at getting historical data online however projecting ahead to see if we can afford stuff causes many problems with me and the spouse. She is quite optimistic about things then we get bit in the butt!

07-22-2004, 02:11 PM	#2 (permalink)
hrdwareguy "Officer, I was in fear for my life" Location: Oklahoma City	First you have to look at the historical data to see where you are. Typically, income won't change often. About the only time it will is when you get a raise or change jobs. Once you have your income figured, look at all your static expenses. Rent/mortgage, insurance, car payments, utilities. These are your fixed costs. Subtract your fixed costs from income. Then start trying to put some reason to your variable costs. Extra spending money, gas money, groceries. Try and average these out over a period of time. Subtract these from the above amount. The left over amount is disposable income. This is what you have to spend on other variable or fixed cost items. As for forcasting, you will have to know things like do you get an annual raise of a certain percentage and figure that in. When looking at new job opportunities, if you know what you will be making, you can figure that in. Good luck, I've done this a few times at my house. Even though I do this, still seems like we get bit in the butt every so often as well. __________________ Gun Control is hitting what you aim at Aim for the TFP, Donate Today

07-23-2004, 05:13 AM	#4 (permalink)
hrdwareguy "Officer, I was in fear for my life" Location: Oklahoma City	Good advice Rodney. I was listening to a financial advisor on the radio one day and she said that you should have about $1000 in a savings account for just such thing. Shit happens and stuff has to be fixed. __________________ Gun Control is hitting what you aim at Aim for the TFP, Donate Today

07-23-2004, 06:52 PM	#5 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	and to continue... once you know your monthly expenses, you then try to save 3-6 months of expenses into some savings so that you can deal with layoffs, sudden illness, or some sort of unemployment cushion. good luck! __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

07-22-2004, 04:57 PM	#3 (permalink)
Rodney Observant Ruminant Location: Rich Wannabe Hippie Town	Just to add to what hrdwareguy said, here are other things to look at when looking at variable costs: car repair, tires, plumbing and home and appliance repair, appliance replacement, clothing, vet bills (if you have animals), out-of-pocket medical bills, and so on. You should even budget for things that you don't need now but know you will need in a few years, so you can put money aside in a separate bucket in advance.

08-05-2004, 06:23 PM	#6 (permalink)
ibis PIKE!	I'm really anal about budgeting. Here's an example: I figured out my Transportation expenses yesterday: Fixed costs: Insurance: $1116 / yr. Registration: $55 / yr. Inspection: $12 / yr. Total: $1183 / yr. or $99 / month Varible Costs: Oil changes: $35 per 4500 miles or 0.007777... per mile. Transmission oil change: $55 per 5000 miles or $0.011 per mile. Tires: $360 per 60,000 miles or $0.006 per mile. General mataince: $7 every 100 miles or 0.07 per mile. I drive about 400 miles a month so that's about $38 per month in varible costs. Grand total: $137 a month or $68.5 per paycheck. If you're interedted in doing it like I do, grab yourself a Managerial Accounting textbook and learn about activity based costing. Sorry for all that... I know I'm anal... I just don't like surprises.