Ok girls, so far we've learned how to collect, clip, and organize coupons. I know you're itching to save money but we have one more step before we can go shopping. We MUST set a budget for our groceries and toiletries!
In the simplest of definitions, a "fixed expense" is one that has a specific due date (mortgage, car payment, student loan, etc). A "variable expense" is one that does not have a due date but is a constant expense. This amount will naturally vary from month to month, but is a necessity. It is my belief that variable expenses are the major stumbling block of family spending!
For the last four years we have tracked every single cent that comes in and out of our house. Now, I love all things Excel but my DH could care less. In order to get him involved I created a VERY SIMPLE variable budget grid.
Every time we spend money it must be entered into one of the four categories- Fuel, Groceries & Toiletries, Miscellaneous, and Entertainment. When we first started we simply entered the amounts that we spent. I wish I could say that we stopped spending when we reached that category limit, but we didn't. We were tracking our spending instead of living by the budget. Surprisingly, we discovered that we were spending much more than anticipated!
So, here's your homework.
1) Print the variable spending grid.
2) Enter a budget amount for each category.
3a) Start tracking your variable spending! OR
3b) Take your last three months of bank statements and enter every expense (that is not fixed) into a variable spending category.
I think you will be shocked by the results.
One final note, in January we transitioned to a cash budget system for Groceries & Toiletries and Entertainment. This has been the BEST thing we've done to prevent us from going over our budget. I wish we had done this sooner!!!! I have $75 per week for groceries/toiletries. When I'm in the store shopping I carefully track the price of each item. If my groceries exceed my cash then I put things back on the shelf. If I've miscalculated and my total is more then anticipated I will ask the cashier to remove something. No matter what you have to stick to your budget!!! We committed to eating PB&J if it meant that we could stick to our budget. Thankfully, this hasn't happened and we actually have more food than ever before!
Getting control of these variable items WILL save you hundreds of dollars every month! I know from experience. Please let me know if you have any questions. We are on this journey together!