Time to Plan: Creating a 2012 Budget

While I can find and post so many great deals, coupons, freebies, etc for you, overall the best way I can help you all save money throughout the year is to encourage you to create a 2012 Budget and do your best to stick to it.

I know, the thought of making a budget does not sound like a lot of fun but it the long-run, it can help make life a little easier if you have a plan set in place to help you meet your financial goals.

Each year in January, I create a simple budget for us and then modify it, as need be, throughout the year. Budgets do not have to be elaborate. My personal preference is to actually keep them fairly simple as I am more likely to stick with it. A budget is simply a formula of Income minus Expenses. I like to break my expenses down by “fixed” and “variable.” Fixed would be the items that occur each month and normally cost the same amount, such as your mortgage, any car payments or loans, etc that you have. Variable expenses are those that fluctuate monthly. I like to set aside money each month for birthday/special events. Some months they are higher or lower so I break them out into a separate category.

These are a few of the things I include in mine: mortgage, utilities, insurance, phones, TV, Internet, Food, Household/Pet Care Expenses, Fuel for Vehicles, Tithe for Church, Savings and our “Allowances.” I try to set aside money in categories for things such as medical/dental/vet bills, car repairs, special events, vacation fund, etc.

There are several resources online for tips on creating a budget. We had great luck reading and following Dave Ramsey’s Total Money Makeover Book as he taught us how to budget down to the very last dollar each month. His book is phenomenal about helping you get motivated to get yourself back on track and pay off your debts.

I’m hoping that if you haven’t already, that you all consider taking a little “Time to Plan” and create a budget this year. You can also start off small and at least create a Grocery Budget for yourself. Here’s what I suggest for that:

1) Start off by keeping your receipts for a month.

2) After you get home from the stores, take your receipts and highlight your items on it like this:
a) Green – items that were on your grocery list that you needed and got a great deal on
b) Yellow – items that were not on your grocery list but were on a great sale and you truly needed them
c) Red – items that were complete impulse buys that you could probably do without

3) Staple all of your receipts together each week. Take a small sheet of paper and make a note to yourself how your week turned out with your purchases. Did your purchases make a lot of good meals for your family? Ideally you want to only buy the items that you can get the best deal on and that provide lots of meals each week. Did you buy a lot of unnecessary impulse items? Are you seeing a lot of yellow, which might suggest that you need to keep track of low inventory items more?

4) At the end of the month, you can add up your receipts and create a budget with your totals. If you over-spent, set your budget lower and work to stay within that amount if you can.

Over time, you will start to be able to see your shopping trends and try to adjust them to squeeze the most out of your shopping trips. A tip I love to share with my readers is to create a shopping list and put any “impulse” items in one area of your shopping cart. Before you check out, take a look at what you added and ask yourself, do I really need them?

Good luck creating your budgets! The time you take to create one can help save you money throughout the year.