A budget – you telling your money where to go instead of
someone else (creditors).
When my husband and I decided that I was going to quit my
job the first thing we had to do was to see if it was even financially smart to
do so. We started living off of his
income (by creating a budget) and putting my paychecks towards our mortgage. We
figured as long as we had the house paid off then even if he would lose his job
at some point we would still have a place to live (even if we were eating beans
and rice!).
When we first started created a budget we still used our
credit cards for everything and paid them off at the end of the month. We tracked what we spent in our minds…. One problem
– our minds weren’t connected to know how much was already spent in each category
so we were consistently still going over budget. Then I found the cash-only system over at
MoneySavingMom…. EURKEA!
This made a huge difference for us… basically you create a
budget and for everything you can spend cash on you do. Once it’s gone. It’s
gone. There is something driving about
wanting to see how much cash is left at the end of each month and adding those
numbers up. I then track and save those
leftovers and save them for a rainy day.
For example – my dear dog… I budget $15 a month for him… that’s for
grooming and vet bills. We get his nails clipped every other month so that
amount adds up quickly… but in November when he has his yearly vet appointment
I am able to pay the bill with cash and it’s suddenly not eating up my grocery
budget. I won’t say it’s easy, you have
to be very disciplined and strict with yourself but boy is it worth it.
So the basics….you start out with how much income is brought
in each month – fixed expenses (things that have to be paid no matter what) =
what you have left to spend on variable expenses. I will be listing my categories below – this is
easily something you can tweak for each family. You have to decide what's a priority for your family. You must have goals in mind - something you are working towards. Either saving towards a new car, a vacation, or paying off debt (this should be top of your list).
Income
Fixed: House, Phone/Internet, Garbage, Gas, Electric, St
Loans, Insurance (life, house, auto), Cell Phone, Charity, Taxes, Car
That gives me my net loss/savings (now if you are already at
a loss here you need to do some major re-evaluating of what is a necessity in
your life).
My variable expenses – items I have a cash only budget with:
Medical (co-pays, chiropractor), Groceries, Clothes, Entertainment, Household,
Restaurants, Rufus (dog), Transportation, Miscellaneous, Kids
A very excellent book that I would recommend to ANYONE would
be the The Money Saving Mom's Budget: Slash Your Spending, Pay Down Your Debt, Streamline Your Life, and Save Thousands a Year
. She writes
in such clear and easy to understand ways.
I have read this book twice and give it away at the budgeting/couponing
classes I teach. It covers almost any scenario you could think of in the ways
to make and save money while barely making ends meet.
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