Now we have to match exactly what we have coming in after taxes with the figure we have just learned is going out. Please write down now all the income from every source that you have coming in. Only calculate an amount you are fairly certain will continue coming in for at least one more year. If you loaned someone money, for example, and she has been paying you back regularly but owes only three more payments, don’t include this figure. Or if you’re working and about to retire or be laid off, don’t count that paycheck, either. Be as realistic as possible as to how much you cftn really count on month in, month out. Possible sources of income:

• Monthly paychecks after taxes
• Predictable bonuses
• Social Security income
• Disability income
• Bond income
• Rental income,

if you have any Gifts from your parents or children, if you can really Count on them year in, year out
Loan repayments, if they will continue for more than a year Income you are taking or about to take from retirement accounts Pension income, Miscellaneous
Take this total and divide it by 12, so you can see what you have coming in after taxes on a monthly basis.

I am asking you now to think about your money. Who cares more about your money than you? Shouldn’t you know where it goes? It’s one thing to say that you want to be financially powerful and responsible. To do that, you must face the truth honestly and know exactly where you stand today. This is essential.
Please get out your canceled checks, ATM statements, credit card bills, whatever will tell you how you spent your money over the past two years. These papers are more revealing than a diary; they contain the key to how you live your life.
Yes, it will take you some time to do this, but think how much time it will give back to you in the future. You work forty hours a week or more to earn your money. I am asking you to take a few hours to take your money out of the darkness, to see it in the light of reality, to see where you stand. Don’t just read these pages—pick up a pen and take action.
Go through your checkbook, canceled checks, computerized statements, all your records for the past two years. Not one year, but two years. Maybe this year was an extraordinary time—you remodeled the house, bought a new car—but looking at a two-year period, you’ll get a good idea of what it costs you to live the way you are living. All your checks, cash withdrawals, money spent every month, money spent once a year, money spent once a season, holiday expenses, everything.
Make categories for each month—such as telephone, gasoline, food, utilities, vet bills, golf fees, baby-sitting.
After all the categories are complete, total each category. Divide each category by 24. This will give you how much you spend per month on average for each category.
4I Now add together all the averages in each category. This will tell you what it costs you to live each month. Remember, these are averages. If your average is $3,000, most months you’ll spend less—say, $1,800 or $2,000. But in some months you’ll spend $5,000 or $6,000. To meet your expenses, you need to bring in that average number each month.