How do you decide????
Find a Conversation
How do you decide????
| Tue, 01-03-2006 - 10:32pm |
How do you decide how much to budget for--for each item? Like for food? How do I know how much money I can afford for food? Or gas?
Some things aren't a choice---medical bills, etc.
And things like for the kids---private school(for my 9yo daughter), swim team for my 11yo, etc. Do you cut out all kids' activities?
Holly

In my monthly budget, I first subtract my mortgage from our monthly income. That's most important. My mortgage payment includes my insurance and taxes, so that's all one big payment. Then my car payment is deducted. Then I deduct my utilities. Just average them out from prior bills. Then gas for the cars. After that is my credit card payment and our son's karate tuition payment. After that is food. To get my average amount, I just watched my normal shopping, tried to cut back a little on junk food and snacks for a few weeks, and then took the average amount we spent. Now, sometimes, I can get a great sale or find some great coupons, and I come in under my budgeted amount. Those are my "Happy Dance" weeks. LOL! :-D Anything left after that is then divided into funds to save, funds to donate to charity, and money to spend on entertainment. If we have extra in any category, it gets snowflaked to the credit card. :-D
That's how we came up with our budget. It took some time and several revisions to get it just right.
As for our son's activities, we are homeschoolers, so we plan any educational field trips out of our entertainment budget. He studies taekwondo, and we do have a monthly tuition payment for that. It's a set amount, so we can easily budget for it. All competitions are known well in advance, so we can budget for hotel rooms, travel costs, and registration fees.
Hope this helps!
Pat :-D
Pretty much I put my budget together entering the things that have to be paid first. This is the way I break down by priority.
#1 priorities - Rent, Car Payment, gasoline, and car insurance. (If you can't pay everything, House and transportation costs would be the priority. You need somewhere to live and some way to get to work.) Although I could cut my gasoline costs by only driving to and from work and cutting out all other driving.
#2 Priorties - Utilties, CC Minimums, Student Loan Payments. (I keep everything paid up to date so I don't ruin my credit.) My utilies I have on level pay so I know what my monthly bill will be (I'm still waiting for my first level pay Gas Bill but I've estimated by using prior months before so that's how I handle estimating the money needed for that.)
#3 Priorities - Then I set aside money for savings. (I've never had much in savings before and I view this as a necessary expense. I'll never get ahead if I don't set some aside. Right now it's $50 a month for Emergency Fund but it's growing slowly but surely.)
#4 Priorities - Any expenses that come up, like property tax, licensing, inspection get deducted next. (I hate the end/first of the year because of these expenses. Some people do better having a savings account for expected expensives like these but I find that I wind up hitting the accounts for other expenses.) Although I'd hate it if I couldn't make them, I'd put them on the charge card at least until I can get some savings built up.
#5 Priorities - After that I set aside money for health and beauty items, pet supplies and groceries. I've found that this catergory is easiest to cut from at least at first.
#6 Priorities - I also set aside a bit of "fun" money to go out with. Not much just enough to keep me from falling off the wagon.
#7 Priorities - Anything left over gets sent my snow flake.
This is all from my net pay though, I also have retirement taken out of my check to be put in my 401K and a small amount for our ESPP. Push come to shove I could cancel out of drop the contributions on both these accounts.
I'm single though so my lifestyle is a little different. Just figure out what you need to cover, house and transportation and build around that. I found it much easier to do that way and cut out extras that I couldn't afford.
Hi Holly.
All my best,
Danni
I'm not sure what others have said, so I may be repeating, but how much you cut out or don't cut out is going to depend on your circumstances.
The first thing to do is to sit down and work out how much you *currently* spend on each category each month. You may be able to do this by sitting down with a year's worth of records, or you may have to track your spending for a few weeks or months.
Once you know how much you are *actually* spending in a month, and on what, you can compare that to how much money you are bringing in. If your spending is exceeding your expenses, that's when you start trying to cut things out. And what you cut will depend on how much you need to cut to make up the difference and on where your priorities lie.
Most people find they are way overspending on groceries. There are a number of ways to cut your grocery spending, but the biggest thing is just to be paying attention to it. Instead of running to the grocery store for a spice or other ingredient, try to make do with what is in your pantry. You'll waste less and make fewer impulse buys. If you want to do something more dramatic (like reduce your spending to $200 per month like our family used to do), you can keep a price book and shop loss leader sales (I can link you to an article I wrote on my method for feeding our family of four on $200 a month, if you're interested).
Also, most people find they don't have to cut everything, or all of one thing, but rather a little bit here and there. So instead of cutting *all* the kids's activities, why not cut out the one that is least important to them or the biggest hassle for you, and leave them in the rest? Or, if you really have to cut back a lot in order to get your budget to work, you can cut all but *one* activity, leaving them with their favorite activity.
I would answer in more detail, but I have much to do at the moment. I hope that's helpful. I'm sure you're getting loads of help from the very wise folks on this board.
Blessings,
Heather
If we really, really want something, then it just has to wait a couple weeks until we can tweak our budget enough to get it. We are putting a decent amount into our 401K plans, and we do have a small savings account, so it doesn't bother me to cut it close, because i want to get out from under the debt we are in. but I am just one of those people who would have a hard time breaking down my budget further, because our priorities shift, and to have a plan and then "break" it would be very discouraging to me. Heather
I agree, you said exactly what I would have said. You must be very organized!
Can you give me a link to that article on feeding your family for $200 a month? My boyfriend and I have no kids and we spend $400 a month, even though we don't buy much and we try to buy mostly sale items at the grocery store!
Cheryl
Edited 1/5/2006 8:34 am ET by cherfer
Anybody else a Women in Red fan??? There is a weekly column on MSN that talks about many of these ideas, and one thing they have suggested is a 60% solution. This makes lots of sense to me, and have been using it as a threshold to help me decide if this is affordable in my budget. The idea is that your committed expenses should be no more than 60% of your household budget. This includes, any and everything you pay for every month.
I find it a very helpful strategy.