Saturday, January 14, 2012

Let's Talk Budget - Time to Get Serious!!!!

It's Budget Time!!!

So if you have been following since the beginning of the year, you now have a current inventory of what you have in your house regarding food and personal hygiene products and cleaning supplies, etc.  You also have a great base for your standard shopping list.  So now what do you do?  The next step is to create a budget.

Now, I know you've heard it before, but it's the truth.  You have to have a budget for your grocery products, etc.  You can't accomplish anything if you don't have a budget because you don't know what you are spending and where to see how to cut it down.  If you don't know how much you spend a year on groceries, I'll make it very easy for you.  Grab your checkbook register for last year and a calculator. 

Don't panic.  You don't have to total up all of the receipts for the year, only 3 months.  Pick one month between January to May (doesn't matter which one) + one month between June to August (again doesn't matter which one) + December.  The reason for December is that most families spend more on food for the month of December.  Now if you actually spend more in November than December, then use November.  You need to have a month in there where you spend more than normal for the sake of the average.

What you add is all entries for grocery stores, pharmacy type stores (i.e., CVS, Walgreens, Rite-Aid, etc.) and any entries for places like Wal-Mart, Target, etc if those places are where you purchase the majority of your groceries, personal hygiene products, etc.  If you only shop at pharmacy type store for prescriptions, then skip those entries.  What you are after is any receipts for groceries and personal hygiene products (shampoo, toothpaste, makeup, laundry products, cleaning supplies, etc.)

Once you have those three months totaled all together in your calculator divide by 3 and you have an average.  Now that is your budget or base.  That doesn't mean that you are going to continue to spend that amount, but at least you have somewhere to start.  So if that number is $647.00 then your budge for each month is $647.00.  The goal in the beginning is to start cutting that by 25% per month.  So instead of spending $647.00 a month, your goal at the end of 3 months is to be spending only $486.00 a month.  And just so you know, that 25% savings over a 12 month period = $1,932.00.  Just think what you could do with that. 

Now, you have a budget, next you need accountability.  What's that?  Well, it's what I have been showing you every time I go shopping.  I post the pictures so you see what I have purchased and the receipts showing what I paid which is making me accountable to you.  Want to know what my budget is?  $200.00/month for food and personal hygiene products.  BULL#^&* you say.  It's the truth.  Didn't use to be.  I'm amazed that years ago I was spending $600 to $750 a month on food and personal hygiene products.  Now, it's very easy to keep it to $200.00/month and most times I even make it lower than that.  Notice that I did not include pet food in that amount.  I have a separate budget of $100.00 for pet food and treats.  I could include it and raise the total to $300.00, but I personally like to keep the two separate.

Once you start making yourself accountable, you will be more diligent in how you spend your money.  It takes work and effort and I won't lie to you about that, but after you have been doing it for a little while it comes second nature to you.

So use your computer skills or get you a notebook or whatever to keep track.  Start with your average on top and subtract each purchase you make during the month from the total.  It's like your check for the month for groceries.  Starting with the total on top and subtracting out each purchase makes you a lot more aware of how you are spending the money.  For example if it's January 16th and you only have $150.00 left for the month, you are going to really need to watch how you spend your money the next 2 weeks or you will run out of money.  No cheating.  You can't go back to the kitty and add more.  Whatever your average amount is, that's all you have.  And, you don't get to carry over to the next month either.  So, if you made it to the end of the month and saved the 25% which is actually $161 of the $647.00, you don't get to carry it over.  Put it in savings.  Put it against a credit card you have a balance on.  At the end of the month, that money is gone and you start over again with your average.  NO CHEATING.

Make a Budget
Create a tracking system
MAKE YOURSELF ACCOUNTABLE!!

Once you have this done, we are ready to start talking coupons!!!!  Woo Hoo

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