Last week’s assignment was to track your spending; to be able to actually see where your money is going. This week, let’s talk about setting up a Family Budget. This is a little difficult for some people, so just be patient with yourself, as you do this next assignment. It’s all about setting goals for your money! So let’s get started.
Grab a sheet of paper. Label the top of it with the month and year. Just below the title of your page, you will create two sections: Income and Expenses. Under the Income section, list the income you receive. Start with just your Base Income; the amount that you can depend on each paycheck. This amount may vary, if you work overtime, or generated more sales, etc., but you want to write down your base income. You may make more than that in overtime or more sales, but that’s the amount you feel comfortable relying on.
Now write down your pay dates, along with the amount that you got paid on those dates. Do you get paid once a week, bi-weekly, or monthly? I’m going to use the 1st and 15th in this example.
Under the expense section, you will now start to list every bill you have, no matter how small. Separate them by when they are due and list the name and amount due under the 1st or the 15th on your paper. Now you have a base for what your Monthly expenses are as far as Creditors go.
The next step is to take a look at specifics…the budgeted items that you can change, like groceries, eating out, entertainment, etc. For now, let’s look at eating out. Do you really have to eat out as often as you do? Or would meal planning help you save a few dollars on your budget? For us, eating out was huge! Two people in my home, and we saw that we were eating out at least 10 times a month! Really??? Ten times a month?!?! That was totally uncalled for! We cut that one down immediately! We were able to save tons of money by no longer eating out, as often as we did. Some will cut it out completely. And really, there is no reason why we couldn’t have either. But we chose to cut it down to once a week, sometimes only twice a month. If you’re spending more than $100 month on eating out, cut it down to $50 a month. If you see that you can cut it down even further, then do so. BUT, I caution you not to make it too strict. Being too strict and feeling deprived, will cause you to want it even more, and you will fall. It’s happened to many others when they make their budgets so strict, they feel like they’re being scolded and put on a Time Out! LOL
Give yourself a good three months to adjust your budget. You’ll need it. You’ll find that some things can be less than you thought; while other things may need to be more! So just take your time each month and find what works for YOU!
This next section, we will cover is Groceries. A lot of people ask me how to determine what you spend on groceries each month. There are a lot of answers to this, because there are so many variables: i.e. How much is your income? How many people are in your family? Are your kids involved in a ton of after school activities? You will need to take all of those into consideration when deciding what to spend on groceries.
If you’ve never tried to limit your grocery spending, aim high for now and reduce it later. The worst thing you can do is budget a certain amount each week, and see that you need much more than that! There are TONS of ideas on Pinterest that you can research on how to save money on groceries! For us, we are a family of two. I budget $300/month for groceries. There will be months that you may need to adjust this amount because of holiday parties, graduation parties, birthdays, anniversaries, etc.
My grocery budget only includes food. I have another budget category for household that includes things such as toilet paper, paper towels, cleaning supplies, etc. I also have a budget category for my pets; food, Vet care, etc.
After you have entered every budget category, total your groceries and your bills and subtract that total from your total base income. Do you have money left over? Or is your money now in the red? Don’t panic if you don’t have a lot of extra money to work with – next week I am covering Meal Planning and other money saving ideas that will help! This should help in creating a comfortable budget. This week, just write the numbers down and have an idea where you are right now.
If you typically shop with a debit/credit card for all of your purchases, look at the number that you wrote down from last week’s assignment for groceries. For us, that was a bit difficult because we shop a lot at Walmart. So when I looked at the numbers for last week’s assignment, I wrote down numbers for every trip to Walmart; which may or may not have been for actual groceries. BUT, I wrote down half of that amount to account for other items that most likely were not groceries. So let’s say that Walmart number came to $800. I took half of that amount and wrote it down as groceries. Then I took 20% of that and shaved it off of the top of that amount, leaving me with my grocery Budget amount of $300.
I feel like 20% is a good starting point. You don’t want to set your grocery budget so strict in this first month that it will cause you to fail. BUT, you don’t want to set it too high either! Setting it high takes money away from other things that you could be using it on in your budget. Dave Ramsey always told us in our classes that the first three months of budgeting is your breakthrough period, where you will adjust, and adjust, and adjust, until you come up with the perfect numbers for your budget. So don’t be afraid to adjust where it’s needed, IF you need to adjust.
Continue entering your numbers for each budgeted item until all items are covered. Again, you can go to Pinterest and find a ton of examples of how to create your budget sheet. It doesn’t have to be anything fancy! It just has to be written down so you can actually SEE the numbers. I have entered a few links below for your reference:
CASH ENVELOPES: I use cash envelopes each month. For a few selected expense categories on my budget, I set aside that cash amount and put it into envelopes. Each envelope is marked with a certain category: i.e. Groceries, Fuel, Eating Out, Personal Care, etc. I don’t have an envelope for every category; only those that I use often. Once the month is gone in that envelope, I’m done spending for the month! That’s it. No more! This is a HUGE lesson on budgeting your groceries! When you actually see the money in your hand and you see it dwindling down, you realize real quick how important it is to stick to that budget! No borrowing from other envelopes either!
Setting a budget is all about numbers, as you know. It’s about setting GOALS for your family and your income. Putting the numbers down on paper is only a start. It really does include much more than this, but once you actually see the numbers, it will give you some incite into what the rest of your life looks like. Truly spend some time with these numbers. Be honest with yourself. Are there areas in your life that you could make some changes to reduce your expenses? Could you cut down your eating out to twice a month, instead of 2 or 3 times a week? Is your family willing to pitch in and help with meals, so all of the cooking isn’t put onto just one person? Again, there are tons of meal planning ideas on Pinterest that can teach you how to do freezer meals in one day, so you take one day to cook and have 30 meals in your freezer afterward! It’s all about being creative!
Creative thinking is a major plus when setting a budget. But along with creative thinking, it also takes being intentional with your money! When you see what your budget amount is for the month, you will want to do everything you can to stick within that budget. BUT, you will see times that it may not be possible to stick within the budget due to unforseen things happening in your life. That’s ok!!! Get through that unforseen thing, and then get yourself back on track again!!!
Next week, I’ll be covering more ideas on Meal Planning and offering some other tips on how to reduce costs in certain areas. So for this week, your assignment is to just get those numbers down on paper to create that budget. Actually let the numbers create a new lifestyle for you and your family! If there are areas that you know you can cut out, or cut down on, talk to your family about it. It truly helps if everyone is on board together!
Until next week, be blessed.