So I ranted and raved about how great I am at financial planning, told you that my hubby does it now, and then left you hanging. Since you’ve all been asking, Here’s Part 1 to house hold budgeting Cathy-style:
You’re SOOO not going to like step one. So I’ll leave it until later.
Calculate how much money you have coming in each month. If you get paid every two weeks, then include 2 pay checks. If you get annual income, divide by 12 months, and include it here. Also include:
both incomes (net - that is what goes into the bank after taxes, etc)
gifts that you know are coming/ annuities
tax credits or child benefit cheques (you should SO live in Canada - we get cheques from the government!)
This is NOT your savings or retirement, beach house, or benz, m`kay? ( namely, assets ) - this is stuff coming in every month or year (some call it cash flow ).
TOTAL INCOME: __________
Calculate how much is going out on a monthly basis. These are your expenses, for right now, we don`t need your debt totals, just the monthly expenses, including minimum payments due each month.
Note: Just round the numbers up. Don`t get stuck on the details, and don`t, for the love of Pete, be optimistic. We`re looking for what is right now - not what you`d like it to be. Don’t share with anyone who will judge you. And don`t judge yourself: you`re still the same person you were yesterday, you`re just doing some crazy blogger-lady`s idea of budgeting. You’ll have a look at your numbers, a look at where you want to be, and make a plan to get there. For now: just the hard cold truth. Include:
personal bills ( drycleaning, fitness clubs or memberships, activities that have monthly payments associated with them, etc) And you may need to list these personal bills for each person in the family that you are budgeting for.
minimum debt payments for each and every debt no matter how small or big (even if you haven`t been paying anything to date) You`ll have a plan to handle them when I`m done with you you`re done.
SUBTOTAL OUT: ___________
Okay, now it is unavoidable. Welcome to step ONE. You need to know what you spend on groceries, fuel, lunches, the dollar here, the dollar there for the entire month, last month.
What? You don`t have every receipt for the last month? Yeah, I don`t blame you. Here is a worksheet if you find it convenient, but all you need is a piece of paper and a pencil. Write it down this coming month. That`s October, people. Why wait? Remember: Every. Single. Penny.
See, I told you you wouldn`t like it. It`s the same answer every one and every book on budgeting will tell you. In order to save for the stuff you really want (new shoes, holiday, kids soccer lessons, etc) you may need to change a few things about your spending. How will you know what to change about what you`re doing, if you don`t know what you`re doing? If you honestly have an easier answer, I need it! Now.
Here are the categories that we track MONTHLY that don`t have fixed monthly amounts (or didn`t before we set a budget):
spending allowance for Mike
spending allowance for me
spending money for family activities & eating out
hair cuts & esthetics
Your categories might be different. I found that most of what I usually bought fell into those categories. I include household cleaners, small maintenance items (lightbulbs), toiletries, vitamins, paper products, and ink cartridges all in my grocery budget.
SUBTOTAL Expenses: _____________ (if you`d like to use my worksheet, leave a comment and I`ll email you an access code, you can then print, copy, or send it to yourself so the formulas work.)
Step Four, for real
There are some categories that we haven`t covered yet. These categories you can figure out later, after you have Part I finished. These are the things that are not covered above, but need to go into your plan eventually.
income taxes (usually taken out of your income before you ever get it)
property taxes (usually taken out with your mortgage payment monthly)
vehicle maintenance (who can afford a huge repair bill? we need to save bit by bit for this.)
vehicle savings (sick of the vehicle payment? Save up to buy a used car without credit.)
savings account (one month of income put away in case someone looses their job)
goal account (we call ours `Holiday`).
Also, clothes don`t need to be purchased every month, but at the beginning of a new season, we end up spending more than we can afford. So we save up for:
clothing (all 5 of us)
gifts (especially Christmas & shipping costs of sending gifts to family)
home repair (I need to save up for the occasional gallon of paint, and door stops - do yours break all the time too?)
Once you have all the data, you`ll want to kill me. But that`s okay. :) I`ve been there too. We`ve learned the hard way how to budget, and the necessity of it. You can learn this. It doesn`t matter how much debt you are in, you CAN do this. We will at another time, look at how to get more of your income into your take-home paycheque, we`ll look at ways to increase what you are bringing home, and we`ll also look at national averages for your household items. $10 is unacceptable for groceries, even if you can`t make your minimum debt payments. Know what I`m sayin`?
You can`t give ALL your money away to creditors. You need to eat, clothe your babies, and live a happy life like God intended. If the incoming and outgoing just aren`t balancing, there are all kinds of non-profit agencies that exist to help in that very situation. They can call your creditors, negotiate smaller payments, lower interest rates, or even recommend bankruptcy if there is no other way. What is important, is that we all do the best we can NOW. We can`t change yesterday, and we don`t know what tomorrow will bring, but we CAN do something right now.
Having a look at what is, is the first step.
God, grant me the serenity to accept the things I cannot change the courage to change the things I can and the wisdom to know the difference. Amen.