Three-step planning method
I. Set up a plan and budget
Estimate the total income or cash receipts and detailed expenses. Make sure incoming money balances out or is more than outgoing money for expenditures.
II. Work on the actual number
Create a tracking mechanism with the following information in a tabulation format.
|Date||Purpose||Payer||Amount of income||Accumulative|
|/payee expenses||for the month|
|1/1/2015||Monthly stipend||Brandon’s parents||$1,000||$1,000|
III. Check and adjust the discrepancy – Surplus or Shortage
At the end of the month, check the difference between the budgeted amount per item and the total. The new actual number will be used for the future budget. We will use a similar approach to guide you in working out practical issues. There are examples of using a plan to deal with practical issues.
How to manage with a roommate
A significant portion of today’s high school students will go to college and will have a roommate as a requirement of living in campus housing. Even if you live off-campus, or you opt to not go to college, the chances are you will still rent with someone and live with a roommate at some point in your life. Besides adjusting to different schedules and lifestyles, you also need to think about how to live with a roommate from a financial perspective.
I. Put down what’s on your mind, or set up a plan
Work with your roommate to assess the total cost of expenses and how much each person will contribute. It’s better to create a joint fund for common expenditures. You should come up with a list of potential daily expenditures for shared items and activities:
- Contribution, meaning how much each person should contribute to the common fund
- Supplies such as toiletries and kitchen items
- Groceries per week
You should also assign a person to take charge of each specific activity. One does bookkeeping, one does cleaning, one is in charge of shopping, and so on. The roles can be rotated. If there are four roommates, each one could take a turn at the task of shopping for the team.
II. Record the actual costs
As we discussed in earlier chapters, you should tabulate the actual expenses in a table or a list-like structure. Each time there is a transaction, the person in charge of bookkeeping needs to record it in the tabulation. It can be kept in a computer spreadsheet or on paper.
III. Work on the discrepancies
At the end of the month, all roommates need to sit down to go through the expenditures together to make sure all are accurate. At the end, they need to make sure all expenditures are covered by contributed funds. If there is money left, called a surplus, they can use it for next month. If more money is needed, called a deficit, each will share the additional contribution. They should also check the difference between the budgeted amount per item versus the actual. The new actual amount should be used for the next budget.