Determining where your money goes is the most difficult part of setting up a spending plan. An average person spends money about three times a day, or 100 times a month. This includes small purchases, such as a pack of gum, as well as larger expenses such as rent.

The best way to know how your money is spent is to keep a record of every transaction. Use a small notebook to jot down any spending and carry an envelope to collect any receipts. Use these records along with your checkbook register and credit card receipts to estimate your spending.

A 60-day record of expenditures will probably provide the most accurate idea of your average monthly expenses. You may be surprised at the way many small purchases such as parking fees, telephone calls, and snacks add up to big dollars. Once you know more about your spending, you probably won't need to keep such detailed records.

If you have used some sort of budget or spending plan in the past, you probably know how much you spend for monthly expenses. If not, use old records, bills, canceled checks, credit card statements, and receipts to figure out the average amount you spent each month in each category.

List the total for each category on the Spending Plan worksheet, placing the amount in the proper column, weekly, monthly, quarterly, or yearly. The major categories are:

• Housing-rent or mortgage payments, property taxes, and utilities (electricity, gas, oil, water, sewer, telephone, repair, cleaning supplies, and garbage collection)

• Insurance (home or renters', life, disability, health, and automobile)

• Transportation (car payments, gas, car maintenance and repairs, bus, taxi fares, tolls, and parking)

• Clothing (clothing purchases, dry cleaning, and laundry supplies)

• Food (groceries, work, and school lunches)

• Entertainment (meals out, vacations, music, sports, television, cable TV, memberships, and dues)

• Savings and investments (credit union or bank, IRA, money market funds, stock or bond purchases)

• Health care (medications, doctor, dentist, clinic, hospital, glasses, hearing aids, co-payments, or deductibles)

• Personal care (hair care, cosmetics, toiletries, diapers, tobacco, and alcohol)

• Family (personal allowance, child care, children's allowance, child support)

• Donations (religious, political, and charitable)

• Education (books, magazines, hobby expenses, lessons, tuition, and newspapers)

• Professional expenses (memberships and dues, publications, travel, and tax-deductible expenses)

• Miscellaneous (taxes, pets, and gifts)

• Credit payments (credit union, bank, credit cards, department store cards, student loans, and other loans)

Not all of your expenses are monthly. Property taxes, insurance premiums, and holiday gifts come once or twice a year. It's easy to forget about them and then not have the money to pay for them. The Spending Plan will help you identify and anticipate these expenses. You will need to set aside some money in your monthly spending plan to meet these occasional costs. The Spending Plan can also help you plan holiday spending so you won't go overboard.