Saturday, November 19, 2011

A Budget is Made

Here is what our Budget will look like, however I believe the habit of saving is far more important than a budget as budgets tend to be like a diet, they rarely work and if they do, they tend to only work for short periods of time. When you make the habit of saving, you are continuously building wealth, regardless of what is going on in your life financially or how much you owe to whom. Creating the habit of saving will only be done if you make sure you pay yourself first. In our case, our form of saving is through investing primarily in ETF's with Sharebuilder.

But when money is extremely tight it is very important to create a budget to know what you have to spend to meet basic needs especially when you do not rely on any outside help. To create an accurate budget, you need to know where your money goes by logging every penny you spend for a months time. See my post on logging expenses for more information here

Our Budget is made on the basis of a monthly income of $1320

Our Planned Budget

Rent                                  $475
Car Payment                     $180
Car Insurance                   $100
Phone                                 $60
Electric                               $30
Propane                           $100
Online                                $10
Gas for Car                       $80
Tobacco                           $25
Food                                $155
Investments                      $70
Netflix                               $12
Gamefly                           $23

Total Expenses       $1320
Total Income         $1320

Now I know we should not smoke and would love to take out the tobacco expense entirely but easier said than done!  Also I could cut out Gamefly and Netflix however we don't have a lot of entertainment here so these are small pleasures we enjoy. Also we are a homeschooling family so I order a lot of educational videos from Netflix from Chemistry and Biology courses to nature documentaries to documentaries on Japan to historical movies! It is a frugal way we not only rent movies we would like to see ( Like LOST seasons) but also a very frugal way for homeschooling.

Now if things continue to spiral down and I truly believe we can not afford these tiny pleasures, they would be the first thing cut out of the budget!