Where does it go?

Before you can plan a month, you need to see one. This lesson takes two months of statements and sorts them into six categories. It takes about twenty minutes with a pen, and most people find one number they did not expect.

What you need

Your last two full months of statements, on paper or on screen. If you use more than one account or card, you need all of them, otherwise the picture is incomplete and the surprise hides in the account you skipped.

The spending tracker from this course, or any sheet of paper with six columns.

The six categories

Housing: rent or mortgage, utilities, internet, home insurance if you pay it monthly. Groceries: supermarket and market shopping, not restaurants. Transport: fuel, tickets, parking, car costs. Regular commitments: phone, subscriptions, memberships, anything that leaves the account on the same day each month. Everyday: eating out, coffee, clothes, small purchases. Occasional: anything that does not happen every month, such as a birthday, a repair or an annual bill.

Do not create a seventh category. The point of six is that you can hold them in your head. If something does not fit, it goes into Everyday or Occasional, and that is fine.

How to sort

Go line by line through the first month. Write the amount in the matching column. Do not round, do not skip the small ones; the small ones are where the surprise usually lives. Then do the second month on a fresh sheet.

Add up each column for each month. Now compare the two months side by side. Housing and regular commitments should be almost identical. Groceries and transport should be close. Everyday and Occasional are the ones that swing, and that swing is the first thing worth knowing about your month.

What you will probably notice

Most people see one of three things: a regular commitment they had forgotten about, an Everyday total that is higher than they would have guessed, or an Occasional cost that made one month look much worse than the other. None of these is a problem yet. Lesson 2 explains why the Occasional column matters more than its size suggests, and lesson 3 shows how the three budgeting methods each deal with it differently.