Budget Lesson, Part 1

Sample <a href=budget” width=”300″ height=”185″ />

Image via Wikipedia

Over the next few weeks, I will be going over my budget in detail.

The first section is income, but that’s straightforward.¬† A line for each income source, bi-weekly, monthly and annual totals.¬† Simple.

Before we start, a word on the organization.  There are five columns:

  • Category – This is the description of the line item.
  • Cost – How much do you pay for this item?
  • Time – What is the frequency of the payment?¬† Valid values are ‘m’, ‘q’, ‘y’, ‘w’ for ‘Monthly’, ‘Quarterly’, ‘Yearly’ and ‘Weekly’.
  • Monthly – Cost and Time are combined to calculate the monthly expense, to make it possibly to budget.¬† If this is $100, I need to set aside a C-Note each and every month to make the payment when it comes due.
  • Yearly – This column is mostly informative.¬† It’s helpful to see this in comparison to my annual pay.

The first section I am actually going to address is discretionary spending.

  • Groceries/Dining¬†¬† ¬†$475.00 – We don’t budget heavily for groceries, which would be a surprise if you saw me.¬† At the smallest I have ever been, fit, I was never small.¬† We shop smart, buy in bulk when it makes sense, and rarely eat out.¬† We also keep cooked rice and beans in containers in the refrigerator as a cheap and healthy way to stretch almost everything we eat.
  • Discretionary¬†¬† ¬†$250.00 – This gets used for household items, like toilet paper and soap.¬† It also get used for the odd book or movie, or to cover the gaps between the other categories and reality.
  • Baby stuff¬†¬† ¬†$60.00 – We have two children in diapers.¬† ‘Nuff said.¬† This category does get progressively smaller as the baby items are outgrown and the children get potty-trained.
  • Gas/oil¬†¬† ¬†$200.00 – Gas and auto-maintenance.¬† This is actually higher than monthly costs, allowing us to set some aside for larger maintenance issues.
  • Clothes¬†¬† ¬†$15.00 – All of our dressers are overflowing, so this is strictly replacement cost for the time being.¬† Our kids wear a lot of hand-me-downs.
  • Blow Money¬†¬† ¬†$50.00 – Occasionally, habitual shoppers need to shop.¬† If they don’t do it on-budget, they will do it off-budget and kill the whole idea.

Initially, we used a “virtual envelope” system.¬† We had a spreadsheet and every time something was spent in this category, we entered the amount and stopped when the category was spent.¬†¬† Didn’t work.¬† We are going on a pure, cash-only system as of the first of the year.¬† No money, no spendy.

Enhanced by Zemanta
Share the Love
Get Free Updates

  • 3 comments

    Trackbacks

    1. […] Know your money. Take some time to examine your income and your expenses.¬†¬† What are you having withheld?¬† Will that leave you with a large tax bill next spring?¬† Will it give you a huge tax refund, which is just an interest-free loan to the government? You withholding goal should be to pay nothing and receive nothing when you file your taxes in the spring.¬† The less you withhold, the more you have for your daily expenses, but, if you withhold too much, you risk an unaffordable tax bill and possible penalties later.¬† Look also at your expenses.¬† Have you used your gym membership in the last few months?¬† Cancel it. Do you know every cent you have to pay each month?¬† Figure it out so you can plan the rest of your financial year. A budget is helpful here. […]

    2. […] This is quite simply the most basic step in organizing your finances.¬† If you don’t have a budget, you don’t have a plan for where your money will go.¬† Without a plan, your money goes on […]

    3. […] your budget. A budget constrains you, keeps you from buying the things you want and traveling to distant, exotic places […]

    Speak Your Mind

    *