financial reflections

One thing that bothered me for years about doing a home budget wasn’t the drudgery of doing a budget - it was the fact that I didn’t understand how much I should be budgeting for various categories.  I’d get answers that were vague, like “it depends on where you life” and “it varies.”  Of course there are people willing to sell me home budget software, but I don’t know if that would solve my problem.

Now that I’m doing a home budget, I thought I’d share what categories I’m using and what I budget.  And yes, I understand that different areas of the US (where I live) or world have different budget amounts, but I think the values are a good ballpark estimate.

Here’s my home budget numbers.  All values are in US dollars and are per-month estimates for a family of five:

• Food and grocery items: $1200.00 That’s $2.67 per meal per person a day for a 30 day month.  But that figure also includes items like toilet paper, soap and the like.  So it’s probably only $2.50 per meal per person per day.  That’s not easy to do.  Here’s two ways we make it stretch:
• Dinner Menus:  We plan out our dinners every week or two.  It makes shopping easier and helps us buy far fewer impulse items.
• Packing leftovers.  I’ve become a brown-bagger on the job.  It saves a ton of money.  I’ve heard that people spend more eating out than they do on big-ticket items, such as a car payment.
• School lunches: $90.00.  That’s 30 dollars per child.  Not bad.  I’m concerned about the quality of the food, however.
• Entertainment: $100.00  That’s about one date-night or family outing a month.  It’s not easy, but we are doing it to pay down our debt.
• Gasoline: $320.00  We drive a lot and the gas money is killing us.  I have a small, old car that doesn’t use much gas, but my commute is loooong.  The other car is an 8-cylinder SUV.  Yes, I’m part of the problem.
• Gas/Electric: $400.  It depends on the month.  This winter the Natural Gas bill has been killing us.  I’m glad I don’t live in Boston or Anchorage.  But in the summers we suffer from high electric bills running the AC.  The two bills balance out, Natural Gas higher in the winter, electric high in the summer.
• Water: not much.  We don’t water our lawn very often and that’s the killer for the water bill.  Ours is pretty low.
• Much of the rest is debt.  That will vary per person.  We pile everything extra onto our credit cards and make fixed payments on our SUV and mortgages (two of them).  Once the cards are gone, the SUV is paid for.

Your results may vary, but that’s my major numbers.  I used these values as part of a zero based budget, modified on what Dave Ramsey recommends.  Income is put in at the top of the form and the amounts are subtracted as you go down the page. 

I use Microsoft Excel to do the number crunching.  I can copy/paste last month’s work and put in the new month’s values.  The categories let me run totals on how much debt I’m paying off or whatever totals I want.  My actuals run pretty close to the plan, so I don’t have to worry about overdrafts.

Sound like too much trouble?  It was hard the first month or two, but I’m in the groove now.  Besides, according to The Millionaire Next Door, most self-made millionaires budget.  Some of them even know their annual clothing expenditures.  With my system, I’ll be able to get a fairly good estimate on items like that by keeping each month’s budget on a spreadsheet.