Creating a budget?
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  1. #1
    Registered User Ocean_Beach_Dweller's Avatar
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    Default Creating a budget?

    Hi everyone,

    I just joined today, and I'm loving it so far.

    I wanted some advice on creating a budget. I started to make one, and it was easy at first for things such as "rent" "insurance" and even "groceries" but after that I got a bit lost. How do I budget for birthday gifts? or ingredients for baking cookies that I bring to a BBQ? or just little household things i randomly need like an extension cord or a pasta strainer?

    It just seems like putting all these things into a "misc" category is sloppy and makes it hard to keep track of spending, but I can't figure out how to categorize all these things, because I don't need to buy a birthday gift every month so I don't necessarily need to budget for it every month. Would food for a potluck go under groceries even if the food isnt really just for me?

    Sorry if this is a bit muddled, reading everyone's tips and such though made me realize just how unorganized i am, and I'd really like to tighten it up a bit. Any advice would be great, thank you!


  2. #2
    Master Dollar Stretcher madhen's Avatar
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    I'm not one to tell you how to create a budget from scratch, as I tried unsuccessfully on several occasions. You can't budget it if you don't know what the amount is.

    What I have found is working for me is "backing" into my budget. I started to track all spending every day for a couple of months, without trying to drastically change my spending. Once I got a baseline of my normal spending, I could figure out where I could adjust. For example, one of the threads I am on, the grocery budget reduction challenge, requires that I reduce my budget by $15 every month until I can no longer succeed in meeting my goal. Then I will know what my bottom line grocery budget is. I *was* budgeting $600/month for groceries, but I am finding that I can easily stay below $500, and the last two months, I've stayed below $450.

    I would not recommend even trying to budget until you've spent a few months tracking your actual spending. You'll just be pulling numbers out of the air.

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    Registered User frugalfranny's Avatar
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    For me, and it may not work for you,.... ANY food item comes out of the grocery budget INCLUDING eating out.......UNLESS I want to use up part of the misc. category for that.

    I always had a misc. category and this is the one that would give me some flexibility......for birthdays, the random item for the house, etc.

    But you also need to track some spending first, like madhen said. Hard to tell you how to budget as you have to end up doing what 'works for you' and it might not work for anyone else.

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  5. #4
    Registered User pollypurebred39's Avatar
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    I use an envelope system and it works for me. First I broke down our wants & needs into catagories such as;

    ~birthdays (who and how many) *Want
    ~Christmas (who and how many) *Want
    ~other holidays like Valentines day, aniversary, ect. *Want
    ~discovered the need (*Want) recently for an emergency gift envelope
    ~misc envelope *Want
    ~redo son's room *Need
    ~clothing budget/seasonal * this is broken into several different envelopes *Need
    ~household items such as bath towels, tea towels, a pot or pan, a lamp, or whatever we need. * also several different envelopes *Need
    ~weekly grocery, HAB, Cleaning *Need


    After the roof over heads, electric, phone, insurance, car gas are paid we get down to paying our debt. We are slow payers but we are paying each and every one. Then we dole out household money, which is mine to envelope budget. I have to decide how much I need to feed my family and clothe my family, what's left can be divided up into envelopes. I've used my birthday and holiday money to fill envelopes too, because weekly household money is not enough to meet our needs.

    Each week I scour the food circulars to see what sales there are, that tells me how much I need to set aside that week. The rest can go into envelopes, my families needs coming before gifts.

    when your talking gifts, you might find you only have a few dollars to spend on each person and still make budget, it sounds hard but I'm learning how to be VERY creative here on the FV. And I have been committed to stay in budget and not rob other envelopes.

    As far as food for parties, or potlucks it comes directly from grocery that week or from my pantry. If there's no way to pull off a dish of whatever and feed my family I make a dessert to take. Wacky cake it's really inexpensive and can be sprinkled with just a touch of powdered sugar making it not even a $1 to take something somewhere. I alway sign up for a dessert or a bread, it's the least expensive thing to make.

    Each week for us is different, I never really know how much will be available to me, so I budget each week accordingly into my envelopes. Our income changes each week so it's hard to have it down to an exact science, but it's what works for us. However you budget it needs to make sense to you or it will be impossible to stick to.

    Good Luck!

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    Registered User Thevail's Avatar
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    I always start from EXACTLY how much do I have? Every week, every month, overall throughout the year.

    Then I figure out how the bills are to be paid. It makes a difference in how you budget the money for them.

    Car insurance is every six months.
    House payment/rent is every month,
    but food is every couple of weeks or every week.

    For "odd" occasions like b-day gifts for the kid's friends I just tend to set a yearly amount, like $100 overall (she has a lot of friends) and for us it works out to $10 per friend. This is one of those "yearly" expenses like Christmas shopping.

    Once you've kinda written down the expenses..

    multiply the weeklies by 52, the monthlies by 12, the 6 month bills by 2, and just add the yearlies straight in.

    Is that number smaller than your yearly income? If not, adjust until it is!

    Do a sort of similar process for EACH month of the year to check and make sure that you're not spending money in May that you won't make until August. It's easier to do than you think when it comes to house taxes or insurance payments.

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    Registered User Ocean_Beach_Dweller's Avatar
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    Thanks everyone, I have quicken online which tracks my spending and categorizes it in a broad way(like when I shop at Target it categorizes it all as "household goods" even if some of it is groceries or clothing etc) so i'm going to look at that for a general idea but also track my spending these next couple of months in the hopes of firming up my budget.

    Oh yea and I don't know how to change this to answered lol, but i'm still open to hearing other tips anyways, so I guess I can leave it open?

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    Registered User gottadance's Avatar
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    I did an excel file with a formula which adds up my list of monthly costs, which I'm happy to share with you or others - since the formula is already created you just have to change the items/costs and it will add up for you.

    For things that are annual - such as subscriptions/memberships, I added them up in a separate list on the same page, then just divided by 12 for my monthly budget. Same with gifts/cards (b-days, xmas, xmas cards, postage, etc), car costs (motor club, maintenance, license renewal) and household (carpet cleaning, gutter cleaning, lightbulbs, gardening supplies).

    Some of the items I included in my monthly budget besides mortgage house/car insurance and utilities include doctor/med copays, tolls, groceries, cell phone, fun spending/dining out, clothes, Xmas food/lights.

    Of course this is a general budget to give me an idea of what I spend per month on average. Each month is slightly different depending on the season, etc. And this year, I've cut back on some gifts, so it's slightly less. You could copy this page and create a new worksheet for each month so you could have an exact budget. I was just trying to create one that was general/an average so I had an idea of where my $ goes.

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    Registered User Ocean_Beach_Dweller's Avatar
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    Thanks gottadance, that excel spreadsheet sounds like a good idea, maybe I can whip something up!

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    I was able to use a template that came with my software to make a spreadsheet. Really helped since I did not have to worry about formulas!!

    I keep track of my spending on this spreadsheet daily. Or when I make a purchase. I do have a misc column where that I tally up for purchases made that are not planned. This helps to keep me on track and I always know how much money I have available. I also know if I am spending to much and need to wait until the next month to buy something.

    Everyone is different, you may need to work with the spreadsheet for a while to see what work best for you.

  11. #10
    Registered User Greebo's Avatar
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    Quote Originally Posted by Ocean_Beach_Dweller View Post
    Hi everyone,

    I just joined today, and I'm loving it so far.

    I wanted some advice on creating a budget. I started to make one, and it was easy at first for things such as "rent" "insurance" and even "groceries" but after that I got a bit lost. How do I budget for birthday gifts? or ingredients for baking cookies that I bring to a BBQ? or just little household things i randomly need like an extension cord or a pasta strainer?
    Our budget has some interesting categories.

    We have budget items where we put cash in an envelope each pay - envelopes with labels like groceries and dining out, and also like "belly dancing" and "dungeons and dragons" (that's her and me, btw, in case anyone wants to know...)

    Then we have budget items where we put money into savings each pay - items like "life insurance" (it's an annual payment) and "car maintenance" (irregular expense) and "clothing" (also irregular).

    Then we have budget items where we simply leave the money in the checking account and leave it there until its needed. That's "utilities" (regular expense), "netfilx" (also regular), and so forth.

    What categories you have and how you use them are entirely up to you. We have a "gift giving" envelope and a "charity" envelope. We have a home repair fund and a household item fund. Others might roll those 4 categories into 2. We don't.

    The point of the budget isn't to follow an exact formula for the categories, the point of the budget is to control yourself. The budget is to create a plan for your money, and then you FOLLOW THE PLAN. It's to keep you from spending food money on the latest DVDs, or rent money on clothes.

    So don't worry if you have a bit of a hassle with it at first - it takes time to develop your budget. The first month will be a mess. The second will be better. The third, even better, and after 90 days, you'll have the process down - IF you stick to the rule of NOT spending what isn't allocated.

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