Budgeting is probably the most important part of living a frugal life. Yes, it’s boring, and yes, it does take up a fair amount of time. But, think of it this way, if you don’t write down a budget and stick to it, then how do you know that you’re not spending more than you’re earning–or at the least–more than you should?
To start creating a budget, you need to determine how much money you have coming into your household each month. It’s essential that you stick to figuring out your finances by the month. Remember to write down all of wages, and anything else that you earn or bring in such as child support or SSI.
Now, start thinking about the essentials you have to pay for every month. This includes electricity, water, telephone, cable, car essentials like gas and oil, etc. Don’t forget to include food, but try to be as strict with yourself as possible in this area. A great way to plan how much money you need each month for groceries is by creating a menu for every day of the month. Plan every meal and decide exactly what you need to buy. You should then be able to easily determine what you’ll need to budget for food for the month.
Include an allowance for paying off debt. If you owe money to several places such as bank credit cards, store credit cards, car loans, etc., also decide how you’ll repay them. There are two ways of looking at budgeting to pay off debts.
The first option is to pick the bill that will be quickest and easiest to pay off. Then, once you’ve chosen a bill, pay only the minimum amount necessary each month on the other bills and put as much money as you can manage into that chosen debt.
The second option is to target the debt that you are paying the most interest on. Once you wipe out the highest interest debt, you will have more money to pay off the rest because your largest “drain” will be gone.
Once you’ve worked out your regular expenses, subtract this amount from your earnings and divide the remaining amount among the non-essentials such as entertainment and clothing. It’s also important to plan for an emergency because you can never predict when something bad is going to happen: your car could break down, your son might rip his soccer uniform or the electric bill might be more than you expect. Planning for such emergencies prepares you to cope with the worst. Then, if anything is left over at the end of the month, treat the family to a nice meal or a day trip somewhere.
If you’re overall expenses add up to more than your income, you’ll obviously have to reevaluate the non-essential portion of your budget. It’s crucial that you’re honest with yourself about your spending habits. Without total self-disclosure you’ll never be able to set up a realistic budget.
It’s also crucial that you stick to your budget. This will get easier with time. But don’t feel like you have to stick to the same budget every month. Variety is the spice of life, so change the non-essentials you budget for and do things a little differently one month.
Budgeting is always stressful the first time or two you try it, especially when you have to drop some “luxuries” that you’ve become accustomed to. But you’ll quickly settle into a pattern and even learn to appreciate the simpler, cheaper things in your life. That’s when all your frugal living efforts will begin to pay off.
By ClubMom Member Janette, Omaha, NE
When we were in college and first married, my husband and I made $7,000 – $8,000 together annually. Now that we’re out of college, my husband works and I stay home with our children. He makes more than we made during our college years, but we use the same budgeting method.
We were both able to get out of college debt free, and remain debt free other than our house payment and the minivan we just purchased. Here’s how we do it:
First, we make a spreadsheet. On top of the spreadsheet we list the amount of money we have each month to spend.
We then list in order of necessity the things that we’ll be spending our money on, starting with essentials such as house payment, food, insurance, gas, and so on. As we get down towards the bottom we list things like “date money, spending money, clothing,” and so forth.
Janette is a ClubMom Member from Omaha, NE.
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