Hi Ho! Hi Ho! A BUDGETING we go!
Jul 13 '00
I have been wanting to write an opinion on managing a family budget for weeks now but I knew that I needed time to sit down and really write out all I know about it and of course the opinions that are my own. Obviously it is hard to write an opinion that works for everyone because we all have different incomes, dreams, and goals. However, I think the majority of us do place our selves on some type of budget no matter what our monthly income is simply because in order to live within ones means it's normally vital.
To begin with it's important to know exactly what your average monthly income is over an entire year. Salaries that change every month do not matter because we are working with averages. In order to set a real budget you have to base it on what the average is. A good starting point is looking at your last 6 paystubs and averaging them out. My husbands jobs occasionally pays bonuses and overtime - we do not add these into our budget they simply go straight to savings. We have built our budget on what we know is guranteed income not un-guaranteed such as bonuses, etc. I know of situations where a monthly income for only a few months of the year actually covers the losses of the other months. These situations, too, need to work on the "average" basis.
We divide our budget into 2 categories. There are the essential items such as Mortgage( or rent), Car( payment if you have one), Electric bill, Phone Bill, Child care ( if you use this- we don't) Life Insurance, Health Insurance and Grocery. Add credit cards to this if you are in debt to them- they are essential because not paying them will hurt your credit rating, raise your interest rates, and put you further into debt. Non-Essential items are entertainment, cable, meals out, call waiting,caller ID, etc etc.
Living paycheck to paycheck isn't healthy. This leads normally to zero savings and very little comfort room, credit card debt, and stress. A real effective budget is one that pays the bills and leaves something left over on a normal basis even if it is very strict. When nothing is left over it means either one of two things. You don't make enough money to afford the debts you have or you have spent too much of your non-essential money. In the same light budget discipline is VITAL. One must be willing to tighten the purse strings when necessary, tell oneself NO, and be willing to turn away from temptations as they crop up.
If in adding up your monthly income and subtracting out your "essential" bills you should have a surplus left over otherwise you are living outside of your "means". If this is the case some slashing will have to be done or else an extra job will have to be worked because you will certainly need more income.
Grocery is the one essential bill that needs to be bought every month however how MUCH you spend here is where the real budgeting comes into play. You will be able to see based on your income vs. debts how much play room you have in this category. For us, a family of 4, I average a monthly grocery bill of around $130 including toiletry and dog food.. We eat cheap but healthy meals, do not buy convienence food, use coupons on the basic foods if we have them, bulk buy, bake from scratch, and use all our leftovers. We could afford a higher grocery bill but the more money left over in this category the more that can go towards savings and/or be spent if we choose on a "luxury" such as a dinner out every now and then. Depending on your family size and your disposable non-essential income you will need to work out your own grocery bill. Remember that you pay for the "convienence" of convienence food with a pretty penny. If you need to slash your grocery bill cutting out these items will make a huge dent. Setting a budget here is vital, however, or else you will find yourself yo-yo buying and not being able to put a ceiling on what you are willing to pay.
Depending on your financial situation you will need to set aside a percentage of your left-over income to cover things such as doctors bills, clothing, gifts etc. I cannot stress how important health insurance is enough. While it's monthly expense, yes, even if you do not see a Dr. but n one wants to be caught in a situation with thousands owed to a doctor or surgeon when you were uninsured...and I stress this because I have lived this and learned a very valuable lesson. Your clothing budget will, again, be based on how much you have left over and exactly how much you want to spend of that on it. In our house we can afford better clothes but prefer to shop at thrift stores and consignment shops first because we have seen on paper how much we have saved compared to retail buying.
"Emergency" savings in this household is a part of our normal savings. We put all extra money into savings each month and if an emergency arises we pull the money from here.
Finally I want to cover the one topic that I think dooms a lot of budgets. In order to really live by a budget you need to stick to it no matter WHAT additional income comes into your house on a particular month. If you make a bonus, or work overtime, or get birthday money, a tax return, etc this shouldn't be seen as a free pass to go out and spend more money that particular month. Maintain an average monthly spending account and you will not only have more money in savings but it will also be gaining interest ( if it is in, which it should be, an interest bearing savings account). A budget should be seen as an ANNUAL buget not a monthly budget. Budgeting yourself on a monthly basis may work at the time but you will realize this is a yo-yo mentality for budgeting and saving.
Your Non-Essential budget is up to you and depending on your financial situation how much you can afford to have, want to have, or choose not to have to dump the extra money into savings. A budget here is vital as well. We set our non-essential budget at $40 a month and we do not go over that. If we want something we simply wait until the next month. Budget discipline is VITAL to any budget. I cannot stress this enough.
Lastly I want to stress setting up an annual budget for gifts and this includes all gifts you know you will have to buy throughout the year and even average in 5 "surprises" ( you never know who will get married!). We set ours and loop it into the money we set aside under the doctor bill and clothing budget. This works very well for us. By doing so we dont splurge on last minute expensive gifts and tend to shop year-round sales for the following Christmas, etc.
Your budget all depends on your particular situation. Depending on how strict you need yours to be depends on your income, dreams, and goals. Setting up and sticking to a budget needs to be a personal and a family agreement. Setting up and sticking to a budget makes life less stressful here because we know what we have, what goes out the door, and how we are building our savings. One income, Two income, Three income it doesn't matter in a way we all need budgets. Good luck with yours.
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BRmom
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Location: Baltimore Maryland
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