Thursday, December 9, 2010

Thrifty Thursday:: Step 3 Budget

Now that you've collected your coupons and have them organized it's time to shop! Right?? No! Before you step foot in a store you need to set a budget. More than creating one, you need to learn how to stick to it! Let's get started:

1. Budget each paycheck. Create a simple budget so that you will know where every cent is going. The best budget is an honest budget! Don’t write things down that you hope will happen or you wish was the expense.

2. Use cash. This is the only way to guarantee your budget has a "stop sign".

  • Pick categories. Choose categories from your budget that you will manage with cash. For example, you won't use cash for select bills (such as a mortgage, car payment, etc). BUT, you should use cash for your variable expenses.
  • Keep it simple. For our family, we choose to use cash for Groceries/Toiletries and Entertainment (date nights, family fun, etc). We don't include Fuel because I don't want to leave my kids in the car while paying. Practical, right? We could break down our cash categories even further (clothes, gifts, hair, etc) and that works for some people. We choose to track those occasional purchases in our Miscellaneous category. Why? We aim to be calculated spenders and anything like that should be planned. Thus, we track these expenses in which easily rolls unused funds from month to month. For example, if you didn't use $30 budgeted for Auto Maintenance then it rolls that surplus to the next month.
  • Be calculated with your purchases. Using cash forces you to become an aware shopper! If my total is $55 and I only have $50 cash then I kindly ask the cashier to de-scan something from my order. Embarrassing? The first time, yes. Now, no way. When I get in the car I'm so happy I stuck to my guns and didn't go over my budget. Hello, Stop Sign!
  • Schedule your cash. If you have a fixed paycheck first thank the Lord for your job and His blessings! Then, plan to get cash out on that same day your family gets paid. For us, that is every two weeks.
  • Organize. I started with plain white envelopes and wrote the category name and budget amount on the front. For example, Groceries/Toiletries $150. Simple. You could also use Dave Ramsey's envelope system. I've since upgraded to a cute wallet. Totally up to you. Just find a way to keep your money separate.
  • One final note, give yourself some grace. It will take a couple months to perfect the system. You may need to change some figures and add or remove an envelope or two. I can promise that if you stick to it you will SAVE! I know from experience.

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