50 ways to leave your debt behind: make a budget

by babhoyersh on April 8, 2011

Budget or spending plan, making a plan for every dollar that comes in helps to ensure that the dollars go where they need to go. How the plan is made and followed varies from family to family.The fact is making a plan for your money helps you to spend mindfully. Though we can’t have everything, we can choose what we do have.

How to Build the Spending Plan

The best-written spending plans start with real life data systematically and preferably automatically collected on a regularly basis. Whether you track your spending on the computer or via the check book, you need a way to track the money that covers all the ways you spend money. If you create a simple system depending on a checking account or credit card, you’re less likely to lose information about purchases and make mistakes.

I track all of our accounts except our mortgage in Quicken on the computer. For most of our accounts, I enter the receipts and reconcile the accounts on a weekly basis. I’m a busy mom of five kids; mistakes happen. Reconciling the accounts weekly helps me catch my errors before they become serious problems.

We use the following categories for our budget:

  • Mortgage
  • Car Payment
  • Retirement Accounts
  • College Savings Accounts
  • Electric and Gas
  • Water
  • Home Equity Loan
  • Home Phone, Internet, and Cable
  • Cell Phone
  • Life Insurance
  • Medical Expenses
  • Gardening
  • Car Maintenance
  • School Tuition
  • Heating Oil
  • School Fees
  • Clothing
  • Christmas and Gifts
  • Household
  • Food
  • Gas for our Cars
  • Savings – Emergency and Long Term

On paper, I keep a running of total of the amounts in each of our budget categories, updating these weekly. At least twice a month I double check our checking account balance to make sure the balance matches my running total.

The Yearly Process

To set the budget up each year, in December, I review the end of the year numbers for each category. Then, I review my written plan for the following year, making note of anything that we need to plan for financially such as an increase in school tuition or the end of payments for braces. I note the upcoming expenses for each category, total them, and figure out how much we need to set aside each week for each category. During the year, if anything changes with our finances, I review the weekly budget amounts and make adjustments accordingly.

Our spending plan has worked pretty well, though we could be more disciplined about some areas of our budget. I still don’t feel like I have a good handle on Household spending, even after several years. I feel the same way about our Food Budget, which of course is being affected by the increase in gas prices.

Previous Posts in the Series

Give to the Poor
Pay Back All Debts
Save, Save, Save

Frugal Friday at Life as Mom

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coleen April 8, 2011 at 5:57 pm

Hi Barb,

Do you use cash for your food shopping? Maybe that would be a better way to track spending….
Have a great weekend.

babhoyersh April 8, 2011 at 7:53 pm

I do keep a cash envelope for the grocery spending. Part of the issue is that my dh does the shopping at the produce place, and he doesn’t always stick to the list. The other issue is shopping at Amelia’s. I’m as guilty as the next about adding extra items to my cart when I find a good deal on something. Then throw in shopping with kids and things start to get a little crazy.

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