Ringing in the New Year....on a budget....

I’ve never been one to budget. I have been fortunate that I have been able to make ends meet without too much stressing and anxiety.  But, these are different times.  My once cocky attitude that I will always find a job has subsided a bit.  Okay, a lot.  Over my Christmas break, I shredded up some documents from about 10 years ago.  Tucked away in one of my folders, I found a copy of Money Magazines, “How to Retire Young and Rich.”  So, we already know I can scratch out the young and the rich part, but it was a good reminder that we should be more accountable as to where our money is going, how we are spending it, and how much (or, in our case, how little) we are saving.  If nothing else, finding this booklet gave me the motivation to create a family budget.  It will force us to put $X in our savings, and $X into each of our children’s 529 College Fund.  I know exactly how much we should be spending on our groceries, utilities (average per month), what we can save for our vacation fund, what we can spend on clothing/personal items and entertainment, and what we can keep as “pocket money” per week (or, in my case, my lunch money). We even have a line item for “contributions.”  No, it won’t be perfect, but it will act as a guide.  It will force us to save every receipt, and tally up our expenditures at the end of the month.  We will then know exactly where we have spent our money.  They say that the results of what we spend will surprise us!  I think they may be right (like my friend who told me that he spent $910 at Subway last year).

In case you are curious, I wanted to share the suggested break-down, in case you had time for a little exercise in money management.

Below assumes a couple (each with an income, which we, do not) with two kids, so you may have to adjust for your current living situation:

Housing: 30%
Loan Payments: 13-15%
Food: 10-15%
Child Care: 8-10%
Entertainment: 3-7%
Vacations: 3-7%
Pocket Money: 5-8%
Transportation: 7-10%
Clothing/Personal Care: 4-10%
Education: 5-7%
Utilities: 4-7% [for us, this includes cell phones, gas, electric, tv, cable and water/sewer]
Contributions: 2-5%
Savings: 10% [not sure if this is in addition to the 401K, but for getting rich purposes, I will assume it is :)]
Insurance (car and home): 3-4%

We had to adjust as necessary (a little more for utilities, a little less for food --- we didn’t spend that much on our groceries, ever), but in the end, I think I have a good guide to start.

Good luck, and may your wallet get fatter in 2012!