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Mom on Dealz » Budgeting

Budgeting

Feb. 20, 2010
Budget Part 1

If you look up “budget” in the dictionary or online, you will get a million definitions.  The one I like the most and that fits the purpose of our life and blog, is one from thefreedictionary.com

Budget:  An estimate of income and a plan for domestic expenditure of an individual or a family, often over a short period, such as a month or week.

In other words, a plan for your family’s income and use of that money.  Don’t get scared.  Believe it or not, math is my enemy.  I despise it, hence, I teach reading!  Lucky for me, I married someone who loves math and has helped me understand some of it’s concepts a bit.

One thing about math that I do “get” is family budgeting.  I actually enjoy working on our buget.  I guess it’s because I am data driven and love a good challenge.  There is nothing more challenging than stretching your money!  I understand how scary the word budget can be for some people.

So, my goal is to make this topic a bit more user friendly. Also, I hope to help you realize the relief that comes with having a family budget and doing your best to stick to it (nobody is perfect and you will slip up, the important thing is to keep trying).

Our family’s budget serves a variety of uses for us:
1.  It gives us a starting point to begin each month.
2.  It gives us a goal to meet.
3.  It keeps any unneeded spending to a min.
4.  It keeps us accountable to each other as a family.
5.  It helps me be a stay at home mommy.

Where to start?
Basically you need to find out where your money is going each month.
1.  Start off with the money you bring in (your income).
2.  Write down your fixed expenses (oh no! Not a financial term!?!).  Relax, this just means to write down all of your bills that are the same each month such as rent, car payment, etc).  If you feel like using software for this, there are a variety of budgeting programs available.
3.  Write down your variable expenses (breathe). This means to write down bills you owe that change each month such as credit card bills, utilities (power, water, etc).
4.  Find your surplus or deficit (think happy thoughts).  This means find out what you have left over each month after bills and expenses (good for you if you have a surplus) or what you are lacking (deficit, hey, it happens…)

If you have difficulties working these numbers out on your own, check out these sites for free resources:
http://financialplan.about.com/cs/budgeting/l/blbudget.htm
http://www.betterbudgeting.com/budgetformsfree.htm
http://www.free-financial-advice.net/budget.html
http://www.christianpf.com/

March 2, 2010
Budget Part 2

In “Budget Part 1″, I talked about what a budget is, how our family uses the budget, and a starting place for you to begin creating your budget. In part 2, my goal is to help you begin to make a plan based on your findings.

Making a plan
After you have figured out where your money goes each month, how much you have left over, or how much you lack to cover your costs, it’s time to make a plan.

1. If you find that your income is not enough to cover your costs, then you need to cut costs. You may ask, “How?”. Begin by making a list of absolute needs (housing, electricity, water, clothes, and food). Then look at what remains on your expenses list and start cutting. This may hurt, in fact, it probably will, but you have no choice if you are living beyond your needs. Magazine subscriptions, gym memberships, daily trips to get coffee, and going out to eat are NOT absolute needs.
2. If you have enough income to cover your expenses, but money is still “tight”, then ask yourself the hard question, “What am I spending money on that is not a NEED?” and then make some goals from there.

The goals you make will obviously vary depending on your individual situation. As I have stated before, our main goal right now is for me to be at home with our son; so, our goals are to not only cut out unnecessary expenses, but to also trim down our food costs, electricity, and water. Basically to cut EVERYTHING we possible can. It’s not always fun, but it’s our goal.

If things just seem too overwhelming right now, don’t worry. Take a deep breath and if need be, sleep on it. When you revisit the situation, be sure to be well rested and not hungry. If you feel you need a bit more guidance on making goals (whether short or long term) I recommend reading about Dave Ramsey’s plan found HERE. His 7 “Baby Steps” really aided us in our budget planning.

16 Responses to "Budgeting"

  1. Sylvie Williams says:

    I use Quicken to run reports on our spending. We also do not use cash for anything; this way I know exactly where each penny is going.

    This is also an entry for the Eat Smart digital scale

  2. Jan Messali says:

    Great post! You’re right… it’s not always fun to have to scrimp and save, but your son is reaping the rewards of having you home with him. :)
    The resources in the first budgeting post are great. At Christian Personal Finance I found several helpful articles, such as ‘Should you set up automatic payments.’

    Thanks for sharing your expertise.

    1. momondealz says:

      Thanks for the compliments!

  3. Katie says:

    I work as a bartender. We use all of my cash money *Because it is not a set amount* for groceries, gas, etc. When we split a dollar, we do not use the change elsewhere. Instead, we put it into a “jug.” That is our splurge fund. When the jug is full, we use it on something the family has been wanting.

    1. momondealz says:

      We actually used our “jar of change” to pay for all of the tolls going up north one summer! Love them!

  4. Brenda says:

    I used a budgeting system called Mvelopes (through crown.org) for a year or so until I got the hang of the “envelope system”method of budgeting. It’s a bit pricey (about $120/year) but it really helped me see where our money was going and how to better manage it. I now keep it myself in an excel spreadsheet, and it’s been invaluable as my husband’s salary has changed.

  5. Janet Weitzel says:

    Extremely helpful post. So many ppl are scared off by the word “budget.” Great job making it easier.

  6. Pauline says:

    Great advice …really going to help us.

  7. Jamie Vanover says:

    Thanks for the budget tips. I commented to also be considered for an extra entry in the topsy prize!!

  8. Samantha says:

    Your tips are wonderful! Thank You!

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  10. Andrea Reynolds says:

    Very Practical post, and very informative.

  11. Cher says:

    Very insiteful article! Great pointers!

  12. Tonia says:

    I started using software know as YNAB that helps you budget everything. They also offer FREE classes on budgeting It also syncs with my smart phone, so I can see how much money I have budgeted on the go. LOVE this program. Have used it since January 1, and now I don’t live pay check to paycheck. Just google it to check it out. You can download a free trial to see if you like it.

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