After you’ve made a plan and faced your debts, you need to start calculating your expenses. Start with your fixed expenses. Print out a bank statement and credit card statement for the last month. Use different colors and mark every food expense and personal expense. Once you start, you will see a pattern and decide how many colors to use or expense categories you want to use.
Food – I suggest breaking out food into grocery store and eating out. Food expense is such an easy place to overspend when you’re not budgeting and keeping track of it. I keep my Costco purchases in a separate category because I don’t get very often and it can derail my weekly grocery budget. So, I just keep it separate. I also budget separately for my kids’ school lunch accounts. Don’t be discouraged if this number is really high. When you’re aware, you can easily start to fix this if your current spending habits aren’t in line with your goals. Look back at your goals, and figure out if your food spending is keeping you from working towards your goals.
Personal – I like to break the personal expenses into lots of categories. This is a good area to start using cash envelopes to get this spending category back in line. In the personal category, I include personal expenses like haircuts, gifts, cash, clothing, dog grooming, and items for the house (all the stuff I buy at Target). Just like using cash envelopes, I like to put the same amount away each month for these items. If I put away $40 per person each month for clothes, I have a good amount in that category when it is time to buy clothes. I try to buy my kids some clothes each season. The only time I completely clear out this category is when it’s back to school time. I do the same thing with haircuts and gifts. These amounts can hit all at once. But, I try to be prepared. If I set aside so much each month for these items, I have the right amount when you need it.
I’m breaking down my budget starting basics into six easy steps. If you spend 30 minutes on your budget each week, you will have a budget set up and ready to start at the end of six weeks. Then, I’ll help you keep it going and sticking to your budget.