Thrifty Thursday – The Importance of a Budget

I am so excited to be launching a new series on Mess For Less called Spend LESS, Save More!  As a stay-at-home Mom I am always looking for ways to save money and bring in some extra cash.  Every Thrifty Thursday I will be sharing money saving tips that have helped my family have more with LESS!

Ready to save some money?  Lets get started!

Budgeting

Image: Stuart Miles / FreeDigitalPhotos.net

I know the topic of budgeting isn’t very sexy or fun but I feel it is vital if you are looking to save money.  What is a monthly budget?  It can look like many things depending on what you are comfortable with, but basically it is a place where you can keep track of your anticipated expenses for a given month.  We do this at the start of every month on a spreadsheet.  You might use a pad and pen.  A budget doesn’t have to be fancy to be effective.  You just need to stick with it.  Dave Ramsey has some great FREE budgeting tools on his website.  I highly recommend his Basic Quickie Budget and Monthly Cashflow Plan to help you get started.  I get nothing for recommending these free downloads.  I have just found them very helpful.

What should be in your budget?

You’ll want to start with the money you have coming in each month in the form of salary, bonuses, etc. From the net income, you will subtract a list of expenses that remain similar from month to month.  For some, this might include mortgage or rent, car payments, student loans and other bills you get every month.  Then you will look at the month ahead and think about what extra expenses you might have.  Is there a birthday, anniversary, night out, or vacation?  You will want to budget for these items.  You will also want to allocate money to spend on groceries, household necessities, entertainment and countless other expenses that you encounter each month that you might not be aware of.


How can a budget can help you?


The quick answer is that you don’t want to be spending more money each month than you have coming in.  If you find that you are doing this, look over a few months of budgets.  Was there a particularly difficult month (e.g., car repair, health issue) or is this a pattern every month?  If you are spending more than you bring home each and every month, then examining a budget can sometimes help you find ways you can be saving money.

One of the less glamorous aspects of using a budget is taking the time to reconcile it at the end of the month.  You don’t have to account for every penny, but at least give yourself a rough idea of how you did.  For my family, this involves breaking out our bank statements and tallying the expenses in the various categories. This is not a super fun task, but nothing will help you get your spending under control like looking at how much you spent in various areas.

When we sat down with a budget, we noticed that we were spending more than we wanted and had budgeted  on groceries and household goods.  Those Costco trips add up quick!  Before we had a budget I never really thought about what we were spending in this area.  We were ahead every month so I didn’t think about it.  But when we did a budget review and I actually looked at the monthly grocery expenses, I was shocked.  Information is power.  Armed with this power, I changed my spending habits while grocery shopping.  We were able to save 30% on our groceries just from these changes.  But you can’t change what you are not aware of.

The best thing a budget will do for you is give you a sense of control and awareness.  From there you can eliminate unnecessary expenses and cut down on areas of overspending.  I hope I have encouraged you to sit down and work on a budget each month.  Is it worth a few hours of time per month to save money and get your finances under control?  Absolutely!