Creating An Emergency Fund

So I made a complete budget for 2013. This budget shows categories for all my expenses, including savings. Some months the saving category is pretty small, but the point is to always try to put something away for savings. Every little bit adds up. We cut back on the monthly amount for entertainment or clothes and sometimes even groceries (those months just get the bare essentials for meals, kids’ lunches, and snacks) sometimes in order to make sure we put something into savings. Most months I’m putting about $50 into savings. You have to start putting aside some savings. Think of it as an emergency fund. Your car needs brakes, your fridge dies, or whatever the emergency may be… if you have something set aside, the pain of the unexpected event won’t be as devestating.

First we start with the following:

rent/mortgage electric company gas company food (try to get this wone as low as you can) loans perscriptions gas

Then select an amount for savings that you can live with. It doesn’t have to be big. I’d try for a minimum or $25 a month or whatever you are comfortable with.

Next, I look at the following to see where I can cut. This may mean making the minimums or slightly over (if you can) or reducing or even cutting out services.

credit cards medical expenses cable tv internet entertainment expenses eating out

In the end, if you can save just $25 per month every month at the end of the first year you will have saved $300 which is a pretty good start for an emergency fund, especially if you have never had one. On months where you have an extra paycheck (2 months in 2013 for me since I’m paid bi-weekly), try to put all of that money into the savings if you can. It all adds up.

Sit down and figure out your budget using the principle of adding to savings each month (no matter how small the amount is). How much will you put into savings in 2013?

Shop Your Kitchen First!

One of the hardest parts about budgeting is planning how much to spend on groceries.The best way to limit the amount you have to spend on groceries is by making a menu. If you get paid every two weeks start off by making a menu that lasts two weeks.So how do you come up a menu for two weeks? Start with a quick shopping trip to your kitchen…that’s right…shop your kitchen. Chances are you have more food in it than you realize.

Go through all your cupboards listing on paper what you have. Then do the same with your fridge and freezer. Next, sit down with your list and make the menu. Pair together foods and find recipes that you can use up your current stockpile with. When done with the list, look it over and make a shopping list of the extra ingredients that you will need.

The new shopping list should be much shorter now that you are making use of what you have, which means you’ve probably just saved a lot of money. If you then use coupons or store discount cards you should be able to save a little bit more.

Here’s the next step… estimate how much your new grocery list will cost you and go to the bank or atm and remove that much money from the account (you can also use the envelope system for this). Only take that much money to the store with you so that you are more likely to keep to your new grocery budget.

Also post your menu on your fridge so that you are reminded to stick to the menu.

Are there other ways you save on groceries?

 

I found this great post and wanted to share it with my readers. We can all use some help budgeting and here are a few sites to help you out.

All the Things Money Can Buy

I found a few websites that are right here on the internet to help with saving and budgeting. It’s definitely a hard task to begin saving but all it takes is a little research and you’re on your way!

1) FeedthePig.org – On this website you can figure out what you are splurging on and learn what to cut back on. It also offers free saving tips via email!

2) PowerWallet.com– This is the ultimate organizer! It’s a free personal finance manager that will help budget and organize your money.

3) ReadyforZero.com– If you are already in debt (as most college students already are because of student loans), this is the perfect website to get you on track to paying off all debts. Don’t stress!

4) DebtFreeScholar.com– This site has tools and advice specifically for college students to help keep them out of debt. There’s also health…

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Top 5 Reasons People Don’t Budget (and how to get past them)

There are all sorts of reasons people don’t create and live on budgets. I’m one of those people that always had an excuse for not doing it. However, I’ve come to see the errors of my ways. In this post I will list what I believe to be the top 5 reasons people don’t budget and then I will take it a step farther and explain how to get past those reasons or why they don’t make sense in the first place. Here we go…

  1. Image. This is a big one. People get used to living a certain way and like being able to get what they want whenever they want it.
    1. This was clearly one of my issues. I didn’t save for stuff. I didn’t prioritize my spending. If I wanted it I just got it and sometimes that made things harder for me the next time I truly needed something. I didn’t ever want to be seen as someone that HAD to budget. Eventually this kind of thinking made it so that someone that made a good income was facing harder times. I realized a little too late that I need to worry less about what people think and more about considering my financial future.
  2. Don’t know how to create one.
    1. This is a valid reason, but not a reason that should stop you from getting there. There are websites with templates for creating spreadsheet budgets, community education classes available in a lot of areas that teach this, and finally… this site will do what it can to teach you how to budget…even as I learn the best ways myself.
  3. Easier to ignore my spending than try to rein it in
    1. This is true for awhile, but sooner or later debt will start to rise and you will find yourself struggling to get the things you need or want. If you continue to ignore this it will also make long term saving nearly impossible. Eventually you will be forced to budget or go broke.
  4. I disagree with my spouse on how best to spend money.
    1. The solution here is obvious but difficult. You will need to have some long discussions with your significant other about what absolutely has to get paid (rent/mortgage, utilities, groceries), what can be optional (cable tv, trips, going out to eat) and what can be reduced (groceries, gas, memberships). You will need to go through the budget together and work out your differences.
  5. We owe so much money to so many different places that we don’t know where to start.
    1. This was the biggest reason for me and can be the most daunting. The importance of starting allows you to start paying down your bills so that you can get this under control. Budgeting, where you at least pay small amounts on each bill, allows you to hopefully avoid bills going to collections or worse yet into garnishment from your wages.

So what are the other reasons that you know of for people putting off budgeting? If you are already budgeting, what is working for you and what kept you from doing it sooner? I would love to hear your comments!

Envelopes

Today we paid our bills that were coming due and budgeted what we needed in cash for the next two weeks. We set aside a portion of the rent into the savings account. We then figured what we needed for gas, groceries, Christmas presents, bowling leagues, general spending/allowance, etc… We went to the ATM and pulled out that money. We then seperated the money into clearly labeled envelopes that also showed the amount. The idea is to keep us from using the debit card or credit cards. We plan on just using the cash we pulled out and sorted. If we go over say on groceries, we need to deduct the overage from say our allowance.

This is the first time we are trying something like this and I can tell you now I know I’ll find it difficult. I’m used to living off my debit card.

What are some of the ways you try to keep yourself on a budget?