Got My Mind on My Money

// February 7th, 2010 // Budget, Debt, Money Matters, Saving

When I decided I had to get serious about finding a way to stay home, I knew that I was going to have to find a way to save money and spend less. I knew I would have to create–gasp–a budget. Since I hate math (personal motto: “I’m too pretty for math”) and love to spend, the prospect did not thrill me even a teeny little bit. However, the thought of returning to work thrills me even less than math, soo . . . enter budgeting.

I didn’t have a clue how to create a budget, because I didn’t have a clue what our spending was like. When I would go grocery shopping, I’d buy what we needed without much regard to what it cost. I thought I was probably doing a decent job on grocery spending, because I often bought store brands, and because we don’t buy a lot of junk food. However, because I didn’t know what we were spending, I had no idea how much money to allot to the grocery category of our budget. The same was true of pretty much everything else except for a few payments that don’t vary each month.

I also knew that I needed to evaluate some areas in which we could cut back. Dining out was one area I knew would need some trimming. My husband and I don’t go out to dinner much–it’s hard to have a romantic dinner while feeding Puffs to a wiggly 1-year-old–but I often “forgot” my lunch at work and “had to” go pick up lunch at one of the fast food places near work. I knew that I would need to trim the fat, in more ways than one. Again, though–I didn’t know how much I was spending, so I didn’t know how big an impact that would have on our budget.

I did some research on how to create a budget, and realized that I would need to take a close look at our spending before even attempting to budget our income. On New Year’s Day, when everyone else was eating black-eyed peas to bring about prosperity, I sat down with printouts of our bank statements for the entire previous year. I did some searching for a budget planning/expense tracking template and decided to use this one. With my stack of statements and my laptop, I began entering my expenses for every month of 2009. Yikes.

It took me two or three days of working on the expenses during Bear’s naps and after bed time. What I discovered was, um, enlightening? No–nauseating is more like it. No WONDER we felt like we were living paycheck to paycheck! In fact, on average, we spent $9 more than we made every month. How is that even possible?!

I’m not going to horrify you with all the grisly details of our overspending, but let me just give you a hint with that aforementioned grocery category. We were spending $750/month on groceries. There are only 3 people living in this house, and one of us was on a free liquid diet. Seven. Hundred. Fifty. It seemed impossible. I knew we were going to have to cut that dramatically, but how?! I already bought generics and didn’t buy junk food and stuck to a list. Okay, I made a list, but I didn’t stick to it. But other than that, how could I possibly save more? Sure, I could use coupons, but every time I’d looked at coupons before, they seemed to be for things I didn’t buy anyway. Right? (WRONG! But more on that in another post.)*

If you have not taken the time to evaluate your spending–and I mean really get in and dig deep and look at your expenses–you really should. Groceries were not the only shocking category. Some of the “little things” really added up to a lot. Just being aware of the impact your purchases make on your overall financial picture can help you focus on needs and wants and help you decide what is worth the splurge and what is a waste of money (and an obstacle to your goal).

*Just a note: After looking at that $750 grocery tab, I budgeted $550 for groceries–still too much, but I couldn’t imagine how I would be able to cut $200 from it. In just one month of using some money saving strategies that I’ll get into later, I shaved over $400 off of the grocery bill. In January of 2009, we spent $754 on groceries; this January, we spent $338, and we didn’t change the way we eat, so it wasn’t all ramen noodles and beans. Last January, we pulled $787 from savings to cover our expenses; this January, we put $720 into savings. We didn’t get raises, and we didn’t sacrifice and suffer. I’m actually surprised at how easy it has been to change our financial picture so quickly, and I look forward to sharing my experience and my tips with you.

Saving $400/month on groceries will go a long way toward making up any difference in salary that might occur when I find a way to work-from-home.

What about you? Do you have any saving success stories? Any budgeting tips? I’d love to hear from you–we’re in this together!