Something i've come to realize this past year is its not all about how much you bring in, but what you are doing with the income you already have. I'll give you an easy example. When my husband and I were both working we were bringing in about $70,000 a year. After about a year we realized that we weren't paying off our debt at all and it felt like we were always broke and living paycheck to paycheck. How could that be? We took a course at our church about money management and it challenged us to keep track of our spending for a few months (just like how Gail does it on Till Debt Do Us Part!). WOW! Were we shocked to find that we were spending $400-$600 eating out, $100+ at Starbucks and over $1000 a month on groceries. Of course we were feeling broke, because we were!
At that point we were thinking about starting a family which meant that I would be going on maternity leave. We realized we had to rein in our spending or we would have no money to pay for essential baby items. After 3 years of refining our budget I am happy to tell you that our household income is HALF of what we made when we were both working (yes that's $35,000 a year take home) and still comfortably go on 2 vacations a year, have a brand new car, a toddler (who requires copious amounts of stuff (more than a baby)) and another baby on the way and I am now a stay at home mom. We don't sacrifice any of the things we love to do we just altered where we spend our money and how much is allocated to specific items. When you think you have no money sometimes its just about cutting out things you don't need or creating a specific budget and sticking to it.
Here are some of things we budget for every month:
Rent: $975
Food: $400
Tithe: $300
Utilities: $100
Cell Phone: $100
Car Payment: $265
Life Insurance: $50
Gas: $100
Internet: $45
MSP/Medical: $200
Credit Cards: varies
My husband works a half salary/half commission job, so some months we have a little leftover, some months a lot. Notice there are a few things I haven't budgeted for such as Eating Out (restaurants/coffees) and Cable (project free tv), Insurance, Vacations and there is no Savings or RRSP allotment either.
Most of you know the reason I started this blog was because my husband was laid of in 2011, which is why we moved. Due to that we are still fine tuning our budget. Eventually we would like to be able to put money aside each month for savings and start our RRSPs again. Insurance we typically pay out right and just find the cash and we pay for vacations via whatever we get back from our annual Tax Return. Cable, I believe, is a completely unnecessary expense. We use Project Free TV and watch all up to date tv episodes for any show that is currently on TV and we eat out ONLY on Sunday's after church, this way it becomes a treat and not an every other day occurrence.
How to get started:
So all that information is great but how do YOU get started making the same changes.
1. Figure out what your Monthly Income Is:
-This can sound like an easy thing to do, but even for us it can sometimes be difficult. My husband works a salary and commission job so our monthly income is different EVERY month...so we took his average monthly income from last year and that is the number we work from every month.
2. Keep track:
-I'm going to give you the same advice from Gail and the very advice that got us started. Keep Track...every penny, of what you spend. Do it for a month, 3 months, 6 months and see where all your money is going. Sure there is money you have to spend, like rent/mortgage/utilities, but then there are varying expenses such as groceries/gas/cell phone which can be lowered.
3. Start a Spreadsheet:
-The easiest way to start is to create an excel spreadsheet. Put your income at the top and list all your expenses with the budgeted amounts underneath. Every time you pay a bill or spend money minus it from your total. When the money is gone its gone. This way is also a great way to never miss a payment as you will be able to visibly see whether or not you have spent the money you budgeted. It is dangerous to just pay bills as they come in and not list them on a piece of paper as you may find at the end of the month you have forgotten a bill and have no money left in the bank to pay it. Gail suggests the following numbers (% of monthly income):
Housing (mortgage/rent/repairs/utilities incl. cellphone) = 35%
Savings = 10%
Transportation (Car Payments/Gas/Insurance) = 15%
Debt = 15%
Groceries = 15%
Other = 10%
4. Make Adjustments:
After you have been keeping track you can start adjusting numbers.
-If you are finding you have lots of money leftover in a specific area, allocate it to an area that has been tight for making payments.
-Maybe you need to start couponing and meal planning. If you have been reading my blog for a while you'll know I saved $2300 last year just by using coupons. Coupons can be for all sorts of things, online purchases, groceries, movie tickets, restaurants...they are out there and they can save you a bundle.
-Perhaps you need to limit where you eat out or how often like we did
-Do you drive a lot, perhaps you and your husband need to share a vehicle. I get the car 3 days a week and my husband takes it the other 4 days.
-Get rid of cable
There are lots of tiny adjustments that can be made to save you money. You can even 'google' Budgeting or How to Budget for some great ideas and tips.
Total Spent Week 8: $33.85
Total Coupon Used Week 8: $57.74 (SAVED MORE THAN I SPENT!!!)
YTD Grocery Total: $785.24 (average $98.15 per week)
Coupons To Date: $231.34 (average $28.92 per week saved)
% Savings to Date: 28%
No comments:
Post a Comment