I don’t know that I have clearly explained on the blog why budgeting has become such a priority in our lives for the past year. Today, I am going to clarify that as well as discuss some changes that I have thinking about making.
First why is budgeting so important for us right now. We are in what we think of as “our lean years.” For the next 3 years, Matt will be home full-time with the kids, which results in no steady income. He is working on establishing his web design business and God continue to supply us with just what we need but we both know we need to be on a budget during this time. We have been working on reducing our debt to therefore reduce the monthly expenses but we also want to be realistic with what we have coming in.
One thing that has really been useful is our “Freedom Account.” This is actually a second free checking account that we are making monthly deposits into. This account has our car insurance and AAA membership money, our gift fund, clothing fund and auto fund. Car insurance and AAA membership amounts are easy to determine I divided the bill into 12 months and that much is deposit into this account each month. The other areas have been tricky and I am continuing to change. The gift fund was originally at $50 a month but when I looked and this was supposed to include birthday and Christmas present, I up the amount to $100 a month. I also used this fund for buying gift for parties the kids are invited to as well. I still am not sure this is the right amount and will consider raising it to $150 at the point we are out of debt and have enough coming in to cover that amount. Moving on to the auto fund, this is designed to cover maintenance cost such as batteries and tires, in the future it can also be expanded to include saving to purchase a new to use car as well. I currently place $50 a month into this area. The final amount in this fund is clothing. I originally planned to place $50 a month into the account but at two months in I currently have a negative $80 balance. When looking that I have not even purchased a new season of clothing I really feel this amount needs to be raised to $100 a month or $200 a person for the year. However that in reality will mean that I will have to reduce the amount somewhere else because we simply don’t have the steady income for it. II do keep a fund for hair appointment and such but I am currently keeping these in cash. In the future, I also plan to add a travel fund but this year it was funded by our tax returns. I think I should also add that our Emergency Fund is different from this account as well.
The other major items beside standard bills that I budget for each month are Gas and Groceries. Gas is the only area that I am consistently under budget it. However we have decided to not reduce this amount because of the unknown with gas prices at this time. I have noticed a 7 cent increase in a week here. The excess gas money will be used for extra things and/or added to the “Freedom Account” for clothing.
Groceries, the one area that I can’t seem to get a good handle on. Last year the budget was $800 a month. I ended up spending $773 on average a month. In order to reduce our spending, I set the goal for $600 this year. In January, I was $120 over which I deducted from February’s budget. As of today, the grocery money is over spent by 20 cent. So I am trying to take a good hard look at this to determine is this amount realistic or not. A picture by numbers-$600 a month means $100 a person per month of our items including personal hygiene and cleaning products. Broken down even further that is $1.11 per meal per person or $150 a week for 6 people. .Currently both Lily and Haley eat lunch at school most days so that leaves close to $10 a week for the cleaning and hygiene items. I am going to attempt to stick to this budget for the rest of February and March. By then I will be able to tell if it is realistic or needs to be increased by $100. I have a great stock pile at this point so I am hoping to keep it down to $600. What do you do?
