Basics 101...Setting up your budget

One of the most difficult tasks my kids have had to learn is how to live on their own paycheck. It's a lesson they are struggling to understand as they reach past their childhood into adulthood. Two are over twenty-five, the other is just past thirty. All of them have difficulty prioritizing their spending....in spite of the advice and counsel they have received from their dad and me. Guess they just haven't reached the point of wanting financial security yet. They all seem to be in the 'instant gratification' mode. 'Spend it like you have it', seems to be their motto.

In order to really understand exactly where your money goes takes a bit of effort. You have to actually sit down and physically list every penny you have spent and on what. This was an exercise my first husband used to make me do to explain how I had spent our weekly pay. What amazed him, I was able to account for every single penny I had spent. Some of this is just my personality, some has been learned.

The very first thing to do is sit down with paper and pencil...or at your computer in a word processing program...and list everything you spend money on.  

Below is an example of some of the main monthly expenses most people will have:

• Rent/Mortgage
• Food/Grocery Expenses (includes laundry supplies, personal care items, etc)
• Electric
• Cable
• Phone/Cellphone
• Water
• Vehicle Insurance 
• Fuel for your vehicle
• Any other expenses

Once you have your list, fill in exactly what you have been spending on these items.  The amounts may surprise you!  The main items that are a set payment amount can be divided by the number of paychecks you receive in a month's time.  Since we get paid weekly, I divide our expenses by four to get the amount weekly that needs to be set aside to cover each bill.  Things like your Water, Electric and Groceries can be estimated and then divided the same way.  For the utilities, I take our highest and lowest bills and average them...example:  Summer A/C and Winter heating cause our average bill to run around $150....our lowest bill runs around $80 during the months we don't have to use either.  I allow for roughly $120/month for the electric. You can figure yours similarly. 

When looking over what you spend at the grocery, don't forget to think about how often you make purchases like toilet paper, laundry soap, bath soap, cleaning supplies, etc..  Buy these items in larger quantities when you find them on sale, be sure you check the prices for the different size packages.  Again, sometimes the smaller packages can be a better buy at times.  Once you get your 'base' items built up, you will be able to spend less on these items and put that cash towards more food type items.  Just a matter of training yourself to 'take inventory' before heading off to the store.  While you are still looking at your list, look at some of the other things you might be able to live without...snacks are items that eat your budgeted grocery money quickly.  Not to mention some of these can really add the weight.

Grocery shopping is one of the areas where we can really train ourselves to spend less.  Most of the other expenses on your list are not always under your control.  We all decide how much we are able to afford when we shop for insurance, housing and such.  These are usually set amounts every month.  Utilities on the other hand and the fuel for our vehicles...these items are subject to fluctuate.  The only way to make an impact on the price we pay for these is to change our habits.  Turn lights out when you aren't using them, turn off the tv, stereo or other appliances when you finish with them.  Unplug those phone chargers...these things draw power even when the device isn't attached...unplug it when not in use.  You know the drill....most of us have heard these things from our parents, grandparents and other elders, most of our lives.  Its the same with your driving habits.  Use the vehicle that gets the best mileage.  If you only have one, keep up with the maintenance on it...oil changes, tire pressures, air filters, etc.  Most of this can be done yourself with minimal tools and for a fraction of what most 'professionals' charge.  Plan your trips so you can get the most done with the least amount of travelling.  Walk when you can, ride your bicycle when you can...all this will help save your fuel.  If you live where you must drive, like I do, then plan your driving.  Stop at the store, bank, etc, before you head home from work.  If this isn't practical, plan all your errands for one trip on one day.  Cut down on the number of times you head to the grocery a month  Daily shopping will take more of your money than shopping by the week or month.  I shopped weekly for some things when the kids were young, but now, I go once a month for our groceries.  If we run out of milk or bread, I head down to our little corner store, anything else will wait until my next grocery day.  It takes some effort, but I am able to stay within our budget by shopping in this manner.  Our freezer stays pretty full, the cupboard is full of staple items like sugar, macaroni, canned tuna, soups and stuff.  We manage to eat some tasty, inexpensive meals...

When our boys were young and were constantly leaving the house with lights, tv's and radios on, I would call them back inside and warn them once.  After that, the rule at our house was, if the light was left on and you were out of the house...the light bulb was mine.  They would lose the lights for a week...which meant they had to take advantage of the light from outside to do anything in their room.  Same with tv's and radios, except I took the power cords.  It didn't really take very long before they were reminding each other to turn stuff off.

Now that you have an idea where to start, go ahead and look at what you spend, and see where you can 'trim the fat'.  Til next time....