You have your goals and your income; now it's time to move on to your expenses. To make a plan for your expenses (or outflows), there are few things you need to do.

Map Out Your Expenses

First, think about the next 12 months. Are there expenses you expect to come up this year that didn't last year? For example, you might be planning to move to a different apartment, know you have a trip planned over the summer, have a best friend's wedding in six months, or plan to send more money back home. Jot these down or download the spreadsheet in the Financial Adulting toolkit.

Are there any experiences or expenses you'd like to incorporate into your plan this year that you didn't last year? Maybe you would love to get a gym membership or want to be able to take a vacation (or an extra vacation). I call these lifestyle upgrades and there's nothing wrong with them. These are things you'd like to work into your plan. Write them down here.

Next, let's look at your current expenses or what's actually happening with your money. Start by listing each of your expenses in the space provided. You can put them into categories later if you'd like. To make it easier, you can look at previous bank and credit card statements to jog your memory.

Looking at a few recent statements will help a lot, so you can start there, but to be most accurate, you'll want to scan through the past 12 months. This way, you don't forget about an annual credit card fee or that you always buy yourself a gift on your birthday.

Important: This is not going to be perfect. You can always add in things you forget and we'll talk about a process for adjusting these numbers as your life changes.

Add Numbers to Your List

Now we're going to add numbers to each of the expense items on your three lists. What will each cost over the next 12 months? Write down each of your expenses and how much each cost you per month. If it's a one-time thing, you'll put the total in one month (the month you incur the expense). If it's a daily, weekly, or monthly expense, you'll put an amount in every month.

Don't forget to add everything up in the right column (the year's total). Seeing what each expense costs you for the year brings a lot of clarity (sometimes nausea) because we see the true impact it has on our financial life. This can also help us see if there are any expenses we'd rather trade for others.

I like using a spreadsheet because I have the worst handwriting (anyone who's seen it will agree) and also because it's easier to change and adjust without redoing everything.

Some tips:

• For some expenses, you might not be sure what they will cost. Do some research, think back to what similar things cost in the past (look at those previous bank and credit card statements), and give your best estimate. It's much better to estimate and get it wrong than to have nothing there at all.
• For the expenses that vary, like utility bills, I start with the same amount as that month the previous year and add a bit extra because prices usually go up (ugh, inflation). So if summer months typically come with a higher utility bill, that's reflected in my plan.

I know this takes real work but it's truly worth it. Believe me. If we don't have an accurate and clear picture of our spending, the rest of our plan won't be accurate and we won't know how much we can spend and save for our goals.

Multigenerational Living

Dasha Kennedy, the founder of The Broke Black Girl you met in Chapter 2, describes multigenerational living as a living arrangement between two or more generations. One in four Americans live in a multigenerational household and it's most common in BIPOC households.¹ Multigenerational living can eliminate thousands of dollars in expenses and make other financial goals possible. It can also support parents and grandparents who don't have financial means. There are so many ways it can work and benefit the entire family.

For Dasha, multigenerational living made a huge impact in her life. She shared that in the Black community, the homeownership gap makes it harder for families to financially survive on their own, let alone thrive. Dasha's grandmother was the first in her family to own a home. When Dasha was born, four generations were living in that home. When she was a young single mother, she was able to live in that home again and save up before moving out on her own.

Become Aware of Your Spending

When it comes to our expenses, we have a few things (okay, a lot of things) working against us. As a result, many of us would rather not know what's happening with our money. I get it, ignorance can feel like bliss. If you think you'd benefit from more awareness around your spending (hint, most of us would), here are some tips:

• Keep a money journal. Write down (or type out) everything you spend in a physical journal, an app, or my personal favorite, notes on your phone. You can grab a template in the toolkit!
• Spend in cash (when possible). Paying for things in cash usually feels a lot more “real” and painful than swiping a credit card. It's important to note that this isn't the case for everyone. If cash feels more like Monopoly money to you (you know who you are!), skip this step.
• Unsave or don't save your credit card information. If you have to manually type in your credit card info (rather than it syncing automatically), it adds an extra step and forces some awareness when you make a purchase.

  Expense	Jan	Feb	March	April	May	June	July	Aug	Sept	Oct	Nov	Dec	Annual Total
  Example: Student Loan Payment	$250	$250	$250	$250	$250	$250	$250	$250	$250	$250	$250	$250	$3,000
  Total

• Try the 48-hour rule. Wait 48 hours before buying anything that's not part of your regular spending. You might find that you don't even want it when the impulse wears off.
• Unsubscribe from sales emails. If you are always tempted to buy things from your favorite store when you get the 40% sales email, unsubscribe. Why torture yourself? If you aren't ready to take this step, at least have the emails go to a separate folder so you don't see them in your inbox.
• Do a quick gut check before making a purchase. What's my current mood? How long have I wanted this item? You might start to notice a trend in when and where you make your impulse purchases.

The Pink Tax

If you're a woman, you pay a pink tax. I spoke with Liz Grauerholz, a sociology professor who studies social inequalities (including the pink tax!). She describes the pink tax as “the practice of charging women more than men for identical services and products.” This discrepancy applies to clothes, toys, and healthcare products, among many other things.

According to the New York City Department of Consumer Affairs, women's personal care products cost 13% more than the equivalent men's products and are actually smaller in volume.² The pink tax cost the average woman $2,294 in 2021.³ If we invested that amount annually in the market, that would be over $100,000 in 20 years.⁴ I'm enraged. Are you?

Liz shares some things we can do but stresses that “the burden shouldn't rest on the individual consumer to force change. It's important for communities and states to enact policies dictating fair pricing.”

• Support companies with gender-neutral pricing and companies that take a stand against the pink tax (they are out there!).
• Buy more gender-neutral products when shopping for toys, razors, shampoos, deodorant, and other personal care products.
• Avoid the dry cleaner's as much as possible. End of story.
• Compare prices when shopping (this goes for personal care products but also when buying cars and mortgages).
• Talk to your state representatives, local retailers, and on social media and speak up when you see price discrepancies. In certain states you can report it.
• Question unfair pricing when you see it. Liz admits this is hard to do but says you can start by getting curious. At your hair place you might ask, “What's the price of a basic cut?” and then “Is that the same for men and women?” They might make all kinds of justifications but you've brought it up, and that's a win.

Set Up a Sinking Fund

Large irregular expenses are one of the most common ways our financial plans get derailed. A big expense like a vacation, the holidays, or your quarterly homeowner's association (HOA) fee can make cash for the month tight or not workable. Then you have to pull money from your rainy-day fund or put the expense on a credit card to deal with later. It can feel like we're always taking two steps forward and one step back. Blah.

The good news is there's a solution that works – enter sinking funds. Sinking funds get their name because they are money we set aside just to sink (or spend). A sinking fund is meant to be spent on something specific; it's different from your rainy-day fund, which is money set aside in case of an emergency.

For example, if I know I plan to spend $750 in December for Chanukah, I can set aside $62.50 per month or $31.25 twice per month in a holiday fund; $31 per paycheck feels way better than $750 all at once. And when December rolls around, I have $750 in my account waiting for me to spend it. Sounds good, right? Here's how to set up your sinking funds.

Plan for Pitfalls

The following are some common expense planning pitfalls and how you can avoid them.

Time to Incorporate Your Goals

Now that you have your income, expenses, and sinking funds mapped out in your financial plan, it's time to add a section for your goals. I like my goals to be the first section after my income so my goals are top of mind (literally). For the goals section, refer back to your plan in Chapter 3. There will be a line for each goal and the amount you are putting toward that goal each month. You can also include a sum of all your goals so you can see what you are contributing toward all your goals each month.

Putting It All Together

You now have everything you need to put your financial plan together. Your plan will calculate this monthly and for the year. For your plan to work, meaning that you're “in the black” or there's enough money coming in to cover your expenses and goals, this equation has to equal 0 or more than 0.

If the amount remaining is positive, you have some extra left over after your expenses and your goals. If the number is negative, you don't have enough income coming in to cover the expenses and goals you included. Now, for most people, this number is negative at first – sometimes very negative. It was for me. That's okay. It's much better to know this and have the chance to try to do something about it than to not know and stress as you see your credit card debt increase.

Also, the first version of your plan is usually pretty inaccurate. Until we live our plan for a few months and see how it compares to our actual expenses, it might not reflect reality. If over time you find that the numbers are accurate and you aren't able to put as much toward your goals as you'd like, that's also okay. We'll cover some strategies in the next chapters and if you haven't read it yet, The 30-Day Money Cleanse has some amazing tools to decrease spending without giving up the things you love (there's a link in the Financial Adulting toolkit).

Pay Yourself First

If you've tried to put money toward your goals (paying down debt, saving, investing) in the past and were unsuccessful, you might be feeling skeptical that it will work this time around. I understand that. Here's why this time is different.

Many of us (I used to be one) wait and see what's left over at the end of the month before we save. When we do it this way (unless you are one of the few unicorns who can do this – you know who you are), there will never be any money left over to save. Some expenses (or many expenses) always come up. It happens over and over again.

In order to save for our goals, we need to pay ourselves first. That means setting up an automatic transfer to get the money out of our checking accounts to wherever we want it to go. This way we're treating paying ourselves like we would any other bill.

If you were able to make your financial plan equation work, take your goals plan (how much, how often, and where) and set up automatic deposits for each of your goals. If you're worried about the automatic transfers, add calendar reminders that tell you when and how much will be coming out of your checking account. Even if your financial plan needs more finesse, it's important to start. Set up a small transfer (even $5) to your top-priority goal (or two goals). You can come back and increase the amount after your plans come together.

If You Need It – the Health and Safety Budget

If you're really struggling to make your budget work, or you really need to decrease your spending as much as possible, let's talk about a health and safety budget. Tiffany Aliche, The Budgetnista and bestselling author of Get Good With Money you met in Chapter 2, shares that when we experience some type of financial trauma like losing a job (or impending loss of a job) or face a high unexpected expense, “our knee-jerk reaction is to try to figure out how to maintain our current lifestyle. But it should actually be to protect ourselves” and our health and safety.

To create your health and safety budget, ask yourself what expenses you need to maintain your health and safety. Tiffany gives the example of an inhaler for someone who has asthma. If I don't have this inhaler, will I be unhealthy? Will I be unsafe? If it's a yes, it's part of the health and safety budget. Your cable bill, on the other hand, is probably not important for your health and safety.

Then Tiffany suggests “calling the other providers you pay and letting them know you might be late or delayed.” Some will offer hardship programs and others won't, but “you are your first priority, not your bills or expenses.”

Set Up Your Net Worth Tracker

I mentioned in Chapter 4 that your financial plan also includes a current snapshot of where your money is and what you owe. We're going to put that together now. Our net worth is a fancy way of saying what we have, minus what we owe. When someone says the word “millionaire” or “billionaire,” they are referring to someone's net worth.

First and foremost – our net worth has absolutely nothing to do with our worth as a person. We too often conflate the two. And with good reason – it's part of our culture and our society. If the term net worth carries too much weight for you, feel free to rename it. You can call it your “numbers,” “totals,” or even something more fun, like your “treasure count.”

Here's how to set up your net worth tracker. You can calculate it in the space in this section or by using the downloadable version in the toolkit.

Your Financial Adulting Action Items

• Map out your expenses for the next 12 months (this is a one-liner but it's a biggie!).
• Test out some strategies to become more aware of your spending.
• Do what you can to avoid the pink tax.
• Create sinking funds for your larger irregular expenses.
• Put the pieces of your plan together – income, goals, expenses, and sinking funds.
• If you are looking to decrease your expenses and align your spending with your values, do The 30-Day Money Cleanse.
• Set up a health and safety budget if you need it.
• Pay yourself first.
• Set up your net worth tracker.
• If you have a partner, understand what would happen financially in the case of a divorce or breakup. Consider getting a prenup, postnup, or cohabitation agreement.

You've now mapped out your goals, income, and expenses. and put the pieces all together. You have a completed (but not final) financial plan. That's a huge accomplishment! If it doesn't look how you had hoped, you're not alone and that's okay. I have strategies for you in the next chapter, and we're also going to talk about using your money for doing good in the world.