How to Budget: Getting Started

Updated from January 2012

The number one rule to saving money is not spending more than you have.  The number two rule is knowing how much money you have at your disposal! The best (and maybe only) way to do this is by creating a budget.  It can take months to get a working budget for you and your family, and you will constantly have to update it as life changes.  Tonight I’ll walk you through a few steps to get started.

The first thing you need to do is get an idea of how much you typically spend and create a few categories of spending.  If you are paid monthly it is a little easier to set up a monthly budget.  If you get paid weekly, you may want to start just budgeting for a week, but once you have enough saved where you could hold your checks and cash them at the end of the month the budget process will be a bit easier.  I think the monthly budget is easier since most bills are due monthly.

  1. If you use online banking, go back about 3 months and start making list of what your spend your money on, and how much. If you don’t have a way to look at the past month, just write down everything you spend your money on starting now. You will want to create categories for each expense.  The categories in our budget are:
  • Groceries
  • Fast Food/Eating out
  • Bills
  • Gas/Car
  • Clothes
  • Pet
  • School
  • Medical
  • Baby/Kids
  • Church
  • Savings
  • Other (for us this is usually household type stuff like cleaning supplies, toilet paper, etc)
  • One Time Expense (when something random happens, like you need to buy someone a gift)

Calculate the average (total for category/ # of months)  you spend on each category,

2) Next make a list of things that cost money that happen only once or twice a year.  Ideally you will put away a little each month so these are covered when the bill is due. Our list includes:

  • Vacation
  • Car insurance
  • Property Tax
  • Christmas
  • Amazon Prime
  • Kids sports (ballet, basketball, and t-ball)

Figure up how much you need to set aside each month in order to have the $$ available when the bill will be due.  (Example- Amazon Prime is $90 per year so 90/12=7.50 so we set aside $7.50 each month to cover this expense)

3) Add it all up, and see if it is equal to or less than your monthly income.   If it is less than what you make celebrate!! If it is more than what you make, see if you notice any areas you can cut your spending, and keep reading my blog for tips on how to get your spending down.  Remember- your only choice if the numbers don’t balance is to spend less or make more!

Attached is a great document to use when calculating your monthly expenses.

Cash Flow Plan


How I create a stockpile and my stock up price list.

I hate paying full price for ANYTHING, so I try very hard to only buy my groceries when they are on sale.  The only way this is possible to 1) plan your meals around sale items and 2) create a stock pile.  I have been couponing long enough that I have a pretty good stockpile of canned goods, toilet paper, paper towels, hair products, razors, toothpaste, cereal, diapers, wipes and a few other things.  One of my goals this summer is to really work on my stockpile since I have trouble finding the time during the school year to keep up with couponing.  Not only does it save you money, but its an awesome feeling when you suddenly need brownies for an event, or maybe you get some surprise visitors and you already have what you need on hand.

The first thing you need to start a stockpile is space.  We are lucky to have a pretty good size pantry and a large bathroom vanity in our guest bathroom.  I will not end up like the crazy couponers on extreme couponing, so I will only let my stockpile get as big as those 2 spaces will hold.  Its important to get your items organized too so you know what you have to prevent things expiring.

The second thing you need to do is figure out how much you really need.  I have a list of the items my family uses most often and a rough estimate of how much we will use in a year.  I will not stock up on more than we can use in a year.

Another key element of stockpiling is to not blow your budget trying to get your stockpile started.  It is best to work at it slowly.  I have $45 a week to spend on groceries.  I use that money first to buy what I need, then with the leftover I stock up on any good deals.  If there is nothing worth stocking up on, I save the extra money for another week.  If you don’t have any spare money, don’t worry, just keep watching the sales and eventually you will have a week where you come in under your budget. (You do have a budget right???? If not- go to my post on how to create a budget!)

The final and most important part of creating a stockpile is knowing when to stock up!  Everything goes on sale eventually…you just have to wait.  Below is my list of what I consider a “stock up” price for an item.  This is a work-in-progress…I update it as I find things for cheaper.  These are prices I have actually been able to get the items for several times.  Many stock up price lists seem incredibly unreasonable to me, but these are very do-able prices for the area I live in.  A few entries are blank because I haven’t been couponing and watching the sales long enough to figure out a stock up price.  I would highly recommend printing this list and keeping it in your purse or wallet so you have it while you are shopping.  This is also a great tool to figure out if you are truly getting a good deal at places like  Sharp Shopper, Finders Keepers or Aldi.

Stock Up List

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How to save bunches on your phone/cable/internet bills

There are plenty of websites and lists of ways to save on your bills, but I decided to write a list of tips that will actually save you money.  They are all things I have learned from experience and have saved us bunches of money.  I understand every situation is different, and each family has their own needs, but here is some things that have worked for us.

1) Do you really need it?

  • Phone– If you have a cell phone, do you really need a land-line phone?  We kept one for several years because we didn’t want to give out our cell phone to businesses or  to my students.  When we kept track of how many people actually called our home phone, we realized what a waste of money it was!  We saved about $17 a month by canceling. So far, I haven’t had that many extra calls on my cell phone, so no regrets there.
  • TV- This can be a touchy subject!  Totally getting rid of the TV is not an option right now for our family, but we have learned to live with very few channels.  About  a year ago we were looking for ways to cut our bills and decided it was time to cut the TV package we had.  All we watch are the local channels and a few like TLC, DIY, FOOD, and HGTV.  When I called to say we wanted fewer channels they said there was no such package, but when I said I would be canceling, they told me about an unadvertised “Family” package.  We decided to try it for a month, and if we REALLY missed our channels we would switch back.  We did miss our channels but realized it was only because we were watching way to much TV to start with, and decided to just watch less TV.  I would challenge you to cut the TV totally off for one week….you’ll be amazed at how much you will get done!

2)  Ask about unadvertised deals

  • Companies always have unadvertised bundling packages.  Like I mentioned above, until I threatened to cancel with direct TV they said they didn’t have what I wanted.  Be  sure to make it very clear what you want, and let them know you will change companies if they can’t give you what you want.

3) Compare Companies

  • If you are stuck in a contract, it usually will not make sense to switch companies, but as soon as you can, you should shop around.  We used to have Direct TV, and had really poor reception at our house, so as soon as we could, I called comcast to see what kind of deal I could get.  Everyone likes honesty, so I was honest with them and said basically “this is what I have with Direct TV, I pay ____ each month, can you do better?”  Of course they wanted my business and gave me a better deal. I then called Direct TV, and said “Comcast can offer me _____ for ___ price.  Can you do better?”  And again…of course they could!  They offered to take  about $40 off my bill each month for 3 months, which was an amazing deal!  I kept Direct TV for 3 extra months, then called Comcast again and said the same thing.  Direct TV couldn’t match Comcast’s price, so we switched!

4) Check your bill EVERY month!

  • This seems like an obvious tip, but I’m sure people miss mistakes companies make on their bills ALL the time.  For the past year, I think we have had a mistake on at least one bill every month.  These mistakes I usually find are weird charges on my cell phone bill, charges for extra cable boxes, late charges when we paid early, being taxed extra because we were listed as living in the wrong county, not getting discounts I was promised, and the list goes on.  Last month I found over $25 in errors on my cell phone bill!

5) Remember no one likes a grouchy person- and ask for discounts!

  • If something is wrong, its up to the company to make it right.  The biggest thing to remember is that no one wants to help a grouchy person though!  No matter how mean and rude the person on the other end of the phone is, be nice and I promise you will get what you want!  Here is how a recent conversation went with Comcast:

Me: I called 3 weeks ago to get our new cable box and it still hasn’t arrived.  Can you check to see when it will come?
Comcast: I see you called last month, it was never ordered.
 Me: I understand this is not your fault, could you please re-order it?
Comcast: Yes (with a sigh that made me feel like I was asking for a HUGE favor)
Me: Since we have been without TV in that room for 3 months while we have been waiting for our box to be repaired, and then a new one sent, could you give me a discount?
 Comcast: No we don’t do that kind of thing.
Me: Thank you for being so helpful already, are you sure there isn’t anything you can do for me?
Comcast: Actually, I can go ahead and credit you $20, will that make things right?

See how easy that is!  Throw in a few compliments, and ask more than once in a very nice way, and you can almost always get $$ taken off your bill.  I never ask for anything outrageous, only what I think is fair.

6) Ask for Job related discounts

  • Teachers get 15% off with Verizon.  I think nurses can also get this discount, and a few other professions.  It never hurts to ask!
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How to start budgeting pt. 2

Once you have tracked your spending for a little while, you should have a rough idea of how much you spend each month, and some basic categories for where you spend your money.  I have found using Excel is an easy way to keep your budget organized, but this month I am testing out  So far I’m having trouble getting it to do everything I want, but I think once I get used to the site it will make things easier.

Tonight I’m going to give some suggestions for getting your categories together, and what working budget form looks like.  Everything I know about budgeting has come from either trial and error, or Dave Ramsey.

Suggested Categories and goal % of income:

  1. Church/Giving: 10-15%  Take your monthly income and multiply it by 0.1 or 0.15.  This should be your target amount for giving.  If you aren’t there yet, remember this can just be a goal.  Some thoughts on how we feel about this category.
    • “Every good gift and every perfect gift is from above, and comes down from the Father of lights, with whom there is no variation or shadow of turning.”  James 1:17  Since everything we have been given is a gift from God, it is not ours to start with.  “Give, and it will be given to you: good measure, pressed down, shaken together, and running over will be put into your bosom. For with the same measure that you use, it will be measured back to you.”” Luke 6:38 Generous giving will result in a great reward from God.  The bible also says: “On the first day of the week let each one of you lay something aside, storing up as he may prosper, that there be no collections when I come.” 1 Corinthians 16:2.  So because our money comes from God it is not ours and we need to give to others.  This giving must also be planned and done early.
  2. Savings: 5-10%. Take your monthly income and multiply it by 0.05 or 0.10.  Dave recommends doing whatever you need to do to get $1000 in savings.  We also set up a sort of escrow account for ourselves where we save each month for big events we know will happen throughout the year like Christmas, vacation, car tax, and for other things we feel are highly likely to happen in the near future like needing a new oven.  I’ll explain how to break up your savings in a later post.  We have found the importance of saving over and over again!  After Zack’s first knee surgery we knew he would be out of work for awhile and we would have medical bills.  When we did the math, it wasn’t going to add up.   This is when we learned to be super frugal so things would add up and that we needed to be better about saving our money.  Good thing we learned our lesson too because after another knee surgery, a tree on the house (hence the picture at the top), a new septic tank and a baby we realized how amazing it is not to have to stress about money when everything else is in chaos.
  3. Housing: 25-35%: Take your monthly income and multiply it by 0.25-0.35.  This category  includes things such as rent/mortgage, repairs, property taxes, homeowner’s insurance and even furniture.
  4. Bills: 15%.  Take your monthly income and multiply it by 0.15.  There are two types of bills: Unavoidable (Rent, Mortgage, Electric, Insurance etc.) and Optional (cable, Netflix, etc.)  For now group all the bills together, but later you may need to decide if all are really necessary.  For this category we have: Electricity, Water, Gas, Phone, Internet, Cable, Trash, Netflix, Life Insurance, School loans, and cell phone.
  5. Food: 5% Take your monthly income and multiply it by 0.05.  We separate this category into groceries and eating out.  For most people this is where you tend to overspend the most.
  6. Clothing: 5% Take your monthly income and multiply it by 0.05.  This is a category where you will probably not spend the full amount each month, but you will want to save this amount so when you need clothes you have the money to buy them.
  7. Medical: 5%  Take your monthly income and multiply it by 0.05.  Just like with clothes, you will want to save any extra money for later.

In order to figure out the remaining categories, you need to see how much money you have left.  Take your total income and subtract the amount you have budgeted so far.  This is how much you have left to spend on everything else.  Divide this amount into your remaining categories based on how much you spend each month.  Our other categories are:

  • Pet
  • Car- gas, tax, and repairs
  • School- books, and whatever else I need for the classroom
  • Baby- babysitter, diapers, food etc.
  • One time- seems like every month there is something unusual that happens
  • Other- for everything else.

If you find you don’t have enough money to cover everything, start looking for things that are “wants” and not “needs”.

Here is a sample budget form from Dave Ramsey’s website.  If you would like one already in excel, you can email me at and I’ll send you one along with instructions on how to make the spreadsheet do all the math for you.



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