I have always been a frugal person – not cheap – just frugal! By this I mean, looking for the best deals, couponing when we were beginning the vineyard, (John took a paper route to make ends meet so I had access to all the leftover Sunday coupons!), writing all our expenditures down in my budget book…. I definitely knew where our money went but, it always seemed to go really fast! I know, this is to be expected with a large family. Or, with any size family for that matter in this day and time! But, I just had the nagging feeling that I could be doing better.
You know how difficult it is to budget when you get paid weekly, every two weeks or even monthly. Now, though, it seems especially challenging with our paycheck coming after harvest – once a year! Yep, I never thought about farmers getting paid only at harvest time but, that is the way it is! So, for the past couple of years, I write out all our expenses for the year and plan but, it always seems that by the time July rolls around, we are watching every penny again – ugh!
Save-money-mode is not my favorite mode to be in as a family!
This year, though, we listened to Dave Ramsey’s Financial Peace University and what a difference it has made! Not only does he give very practical steps for your finances and getting out of debt but, he is also very funny! He kept everyone’s attention, from our 7 yrs old up to our 20 yr old, with his mannerisms and humor.
How I Shaved 20% off Our Budget!
So, here are the 3 simple steps I took that have made such a difference in our finances:
1. Zero Based Budget
I began a zero based budget which means that I take all my categories and assign them an amount to be spent which is equal to our income. Here are the steps to start your own zero based budget.
1. Write down your total after-tax income.
This is your take home pay. Be sure to include all income sources.
2. List all your expenses.
This includes your regular bills like mortgage, electricity and irregular bills (quarterly payments like insurance) that are due for the upcoming month. Next, add other expenses like tithe, food, gas, entertainment, clothing, savings and anything else that comes to mind. Each dollar you spend should be accounted for.
3. Subtract your expenses from your income to equal zero.
This is a zero based budget – your income minus your expenses should equal zero.
All the category totals together must equal the monthly paycheck income so that at the end of the month, your balance is zero. For us, I divided the money we designated for the year’s living expenses by twelve. It is like keeping a running checkbook balance. I write everything down in my budget notebook and for each category, I have the amount allocated at the top by the category title. With each expenditure, I subtract it from the total of that category so I know how much is left.
This completely changed my mindset. Instead of just monitoring and watching where the money went, I began to tell each dollar where to go!
This is much easier if you have an idea of how much money you spend on each category but still a bit challenging – It has definitely got easier with each month. If you have never done a budget, I encourage you to start. There are online budgeting tools or you can simply write it all down in a notebook. Dave Ramsey has a free online budgeting program called EveryDollar.com. that follows his guidelines with a zero based budget and you can download for free the Quick Start Budget Forms.
2. Use Cash for Certain Categories
The next thing I did and, I got a lot of jokes for this one but, I started using cash for categories like Food, Clothing, Personal/Cleaning, Pets, Medical and Miscellaneous. Dave Ramsey described cash leaving you possession as an “ouchy moment”.
John was especially skeptical. But, I wanted to see if it would make a difference and it did! You really do get an “ouchy moment” when that cash is leaving your hand.
No one is laughing anymore – you just can’t argue with a 20% savings!
The first question I had was “are you just NOT buying things to make the budget look better?”
The answer, “no.” After doing this method since the first of the year, I can truly say, that is not the case.
One thing this zero based budget and using cash has done, is to make me think about purchases before making them. My first question is, “do we really need this?” A great example of this was when we needed a new vacuum cleaner. Before beginning this method, I would have purchased one at Sam’s or Costco and been done with it. But, because I knew that I only had so much money in my miscellaneous envelope, I shopped around. Our previous vacuum was a cheaper brand from Walmart but it lasted for several years – and, with the amount of vacuuming that we do, that is an accomplishment! So, rather than just buying the first one I saw, I shopped around a bit and ended up saving over $50!
3. Meal Planning & Monthly Shopping
I have talked about meal planning before and how it helped save so much on our food bill, in fact, at one time, meal planning saved me 60% on our food bill! It truly is amazing how having a plan, saves time and money.
Because I have priced out the meals that I serve, I know how much each meal I serve costs. So, I updated my menu list being sure to include items in the freezer (from last year’s garden) along with family favorites and good ol’ beans and rice and posted the list on the side of the fridge. I love being able to look at the list and pick what is for dinner.
I also use this list to plan my monthly shopping list. While I pick up fresh produce throughout the month, the bulk of my shopping is done at the beginning of the month. This eliminates buying trips because I will always pick up more than I need – impulse buying!
I have a master list, a document that I print each month, that contains all the staple items that I keep on hand, from cleaning products to potatoes to baking soda to… Using this makes compiling a grocery list so much faster. It takes the guess work out of list making and I don’t forget things that would cause me to go shopping again.
And, to make shopping faster, it is organized according to where things are in the store. OK, so this may be a bit over the top in organization but it really does save time in the store. My goal is to get in and get out as quickly as possible!
So, these are the steps I have taken to take control of spending. And, to be honest, it has been fun and freeing – almost like a game! Except, this game has huge rewards!
How about you – What type of budget do you do? If you don’t, why not? Do you have other tips?