Frugal Fridays: Budget Basics

Frugal Fridays: Budget Basics

Budgets...

Everyone hates them. Most people suck at them our government included. But, they are a necessity. If you are anything like me, if you don't track your money it disappears pennies at a time...A pack of gum here, a candy bar bribe to the kids, a pistachio muffin there, an overpriced beer at the bar...and then your wondering what the hell happened to your paycheck.


So, really the first step is figuring out where your pennies are running off to. You can do this by saving receipts or by carrying around a small notebook and writing down every purchase. If you are a smart phone user or want to manage things online there are a couple neat apps and websites that will save you from stuffing your wallet or purse full of paper. And since I am a cheapskate frugal parent all of these apps are free.

The first is Mint.com (requires registrations)

This app is nice because everything is in one place and it's user friendly. It will automatically enter your purchases and create a budget for you. If you use cash or if you don't want to link your cards you can manually enter purchases on your own. Easy peasy.

My second favorite app is Money Monitor (does not require registration).

I used this app prior to switching over to Mint.com. I would only recommend it for people (like my husband) who don't like to sign up for things with their email. 

However you do it, track your spending habits for a week or two to see where your money goes. After this period don't stop tracking, just use the gathered information as your starting point. 

When you start building your budget you should aim to get your percentages as close as possible to below: 

Housing: 25-35%
Services (utilities/phone/etc): 5-10%
Transportation: 10-15%
Food: 5-15%
Health: 5-10%
Debt Repayment: 5-10%
Personal: 5-10%
Savings: 5-10%
Clothing: 2-7%
Leisure and Education: 5-10%
Emergency Fund: 5-10%

If you are like most people, your budget does not fall into these guidelines in at least one category. Don't let your numbers discourage you, this is just a starting point.

And now you are on your way! Our next post will cover where you can cut to get your budget within those percentages.