So you’ve just landed your new job and you’re sitting with your calculator working out your monthly budget based on your new salary.

Most of us think we are pretty good at estimating our monthly expenses. We account for all the bills that come in every month like cable, utilities, car insurance, and loan payments. We even remember to include such things as groceries, gasoline, and other miscellaneous expenditures.  But our monthly expenses actually add up to a lot more than we typically account for. The only way to determine with any degree of certainty what your true expenses are, is to keep a running count of every penny you spend for a few consecutive months and then work out your average from there. It may seem tedious to actually write down expenses every time you put a dollar into a parking meter or stop into a local café for a cup of coffee; but these are very real daily expenditures which add up quickly. More significant expenses that don’t typically get mentioned are things like getting a hair cut or passing through the car wash.

How much is shelter really costing you? Sure you are factoring in your mortgage or rent but what about the insurance and taxes which you only pay once a year? Are you remembering to include the random purchases like a new DVD player? Have you purchased any new home décor items recently, like trendy candles or new tea towels? Clothing is another category that is often completely underestimated. If you keep track of every purchase for a few months, you will find your clothing costs to be much higher than you might have guessed.

When was your last car tune-up? Did it include tire rotation and a new air filter? How about your Christmas budget, is that reflected anywhere?  How much do you spend on birthday presents for friends and family members?  We often do not account for emergencies or set aside a fund for unforeseen expenses like a spontaneous weekend getaway or minor car repairs. Regular dental or optometrist visits often fail to make the budget list, too, but they are a very significant and very real cost.

When you really sit down and think about everything that you spend money on, no matter how small or large the amount, the budget suddenly takes on a whole new shape. Now that you know what your regular income is going to be, you can structure a realistic budget based on all of your actual expenses, and work out a plan; allowing for the little unforeseen expenditures that can really break the bank if left unchecked.