BUDGET - The Dreaded B Word

Yes, most people hate the word budget. What do you think of when someone says that word?

I know what I thought every time my husband tried to get me to do a budget, "too restrictive", "too complicated", it'll take "too much time". I was not about to do a budget. I was fine just hoping that there was money in the checking account to pay all of the bills. If the balance was getting low, I'd transfer some money from another account. Ah, but what happens if there isn't any money in another account? That's when we'd use the ole "Credit Card" or "Line of Credit", as our "emergency fund". Quite a scary way to live.

So when I first started budgeting in the Summer of 2008 I was SHOCKED at how much money we were spending each month and especially shocked about WHAT we were spending our money on.

The first thing to do when you are going to begin living on a budget is to track your expenses for at least one month. Sometimes it's easy to just look back at a bank statement or through your online banking account to get the history that you need to begin formulating a budget. That's what I did. I looked online and started a spreadsheet that included all of those expenses divided between ongoing, recurring "fixed" expenses and then the "variable" expenses.

Fixed Expenses include: mortgage, utilities, insurance, tithing to your church, school tuition, car payments, etc. The expenses that are the same each month.

Variable Expenses include: groceries, clothing, entertainment, gifts, toiletries, etc. The expenses that "vary" month by month. Sometimes you have them, sometimes you don't and the amounts may not always be the same.

To squeeze the most out of our budget I began to re-evaluate all of our expenses, did we REALLY need to spend money on that? I called all of our utilities and got on the level-pay programs so that I could better budget each month for those expenses. I also re-negotiated things like phone, cable, internet, cell phones and insurance. I canceled several things that we were not really using that much like our Netflix membership and dropped our YMCA membership from a family membership to individual since I was the only one going (then I actually started going on a regular basis so I wasn't throwing money away).

I started planning our meals for the week before I went to the grocery store. This really helped me reduce our grocery expenses and also helped us stop wasting so much food. Because we had our meals planned, we were also less likely to opt for take out or going out to eat and we are now eating more healthfully.

For entertainment, we decided to cut this by doing more things together as a family like going bike riding, or on a picnic or for a simple walk and playing at the park. Of course we got more benefits out of these things besides just saving money, we're spending more time with each other and we're exercising.

Now I use coupons and look online to find specials before we go out. I'll talk more about some of the web sites and other tools I've been using to save money on entertainment expenses in another post.

Don't be afraid of the budget. Instead of being restrictive, it can actually give you control and more information so that you feel more secure about what is happening with your money. And it's a template for you and your spouse to talk about your money plans on a regular basis. That's how I feel about it now.