Now it’s time to take a look at your current fixed expenses.  These are the types of expenses you cannot cut back on immediately if you run into financial problems. Use this worksheet of monthly fixed expenses  to tabulate the amounts you spend on each of these fixed expense items.

Next, use this worksheet to summarize your monthly take-home income. 

  1. For each week of the month enter the amount you receive under each category of income.
  2. Add up each weekly column, and enter the total for each week in Line 10
  3. Add up all Line 10 totals and enter in Line 11.  This is your total monthly take-home income

We now compare your monthly take-home income to your monthly fixed expenses.

  1. Your total monthly fixed expenses (line 28 of Worksheet 1):
  2. Your total monthly income (line 10 of Worksheet 2):
  3. Divide the amount in point 1 by the amount in point 2 and multiply by 100:

My fixed expenses take up ______ % of my take-home income.    This is _________ less / more than the maximum 50% at which I should keep my fixed expenses.

If you are like the average American, your fixed expenses will be well over 50% of your take-home income.

Think about what this means:  You are obligated to spend a huge portion of your income on expenses that you cannot get out of if you run into any financial difficulties. If you are unemployed and need to take a job that pays less than your previous one, you might not be able to afford it because the lower salary will not even cover your fixed expenses.   How can you save any money if so much of your income is already spoken for by these fixed obligations?

This is why keeping fixed expenses below 50% of take-home income is the all-important cornerstone of the 50-30-20 MoneyPlan.  Remember the 50-30-20 pie chart.

503020 PieChart