Get your budget written, groceries first!

We are going to start writing a budget.

First I recommend that you take a look at your spending history via online banking to see how much you spend in certain categories (groceries, household items, entertainment); I don’t recommend you write those numbers down as your monthly budget. If you want to start saving money, you need to spend how you haven’t been spending before.

Here are my recommended steps to start setting up your written budget. You will need a blank sheet of paper, a pen, and a calculator.

1. Write down all of your ATM purchases for 2 months. This includes gas, restaurants, groceries, household goods, entertainment,  and ATM withdrawals.
2. Next to each dollar amount, write the category that the transaction belongs in.
3. Total up the dollar amount for each category.
4. Review the dollar amounts, and notice they are high! You really don’t need to spend that much!

Now that you know how much you are used to spending on groceries, eating out, and random purchases, here is what you need to do:

• First, pick your favorite restaurant. Just one. The dollar amount for one dinner out, including tip, will be what you are starting with as your monthly restaurant budget.  You can make adjustments later.
• Go to Google, and type in a question like “Average monthly grocery bill in <insert county>”. This will give you a vague idea of what sort of grocery budget is realistic in your area.
• Write a grocery list of items you regularly purchase. Milk, bread, eggs, butter, chicken…include realistic dollar amounts for each item (not on sale/coupons). This is the start of your grocery budget. These are your staple items. No matter how much or how little money you have, these are always at the top of your shopping list. Now slash the dollar amount by 30%
• Look in your cupboards. Do you buy lots of snacks? You probably don’t need all of them. Decide what you might buy on a weekly basis (again, not on sale). Write that down, too, along with the estimated prices.
• Total up the weekly cost of your staple items and your snacks.
• Next, look at your cleaning supplies. Are you brand-loyal? Do you break down cost by ounces? How often do you need to buy your cleaning supplies? If you know the dollar amount you usually spend, lower it to at least 70% of what you are used to. If you don’t know how much you spend, figure $1.50 for all purpose cleaner, $5 for laundry detergent, $3 for dishwashing products, and $7 for paper products. These are estimated weekly figures.
• Add your grocery budget as of now (using above steps) to your cleaning supplies budget. Add $10/week to this, and if you have kids in diapers, add another $5. This total is your weekly grocery/household budget.

For the next 2 months, I want you to go to the bank once a week, and pull out cash to cover your budget. Start using the cash envolpe budgeting system. Pull out enough cash for each of your categories on the same day every week. It might be challenging to not borrow from the next week, but try your best not too. You may be amazed by how well you are able to hold on to your money.

 If you think this budget is not doable, keep checking in on my posts, I am going to show you how you are going to cut your spending!

I use cash envelopes as my budgeting system. I write checks for rent, use my bank account for bills, and cash for literally everything else. Here are my envelope categories:

• Grocery/Household
• Birthdays
• Entertainment
• My money (treats)
• Tithe
• Clothing
• Gas

Here is the simple way I created my budget. I did write out all my spending for 2 months, just to see how much extra money I could have each month. I then picked a dollar amount ($40) that I wanted to spend every week on grocery and household items. This is for groceries, snacks, household items, diapers for 2 kids, and wipes. Some months it includes pet food for 3 dogs and 3 cats.

Yes, that’s right; I live in California, and I spend $40/week on groceries and household goods for 2 adults and 2 little ones. Some might say that the only reason I am able to keep my budget that low is because I have 2 very young children who eat almost nothing. While that is partially true, I also have 2 young children who require diapers and wipes. Those are not cheap to buy!

Next week I am going to review how I came up with my spending categories, and how to pick the dollar amount you can stick to.

Have you ever had a written budget? Was it hard to stick to?