How to Make a Budget If You Don't Know How Much Things Cost
Money has a funny way of disappearing. You pick up your paycheck at the beginning of the month and feel like you're rolling in dough. By the end of the month, you wonder if you have enough left for formula or diapers. Establishing a budget is the best way to take control of your finances and take care of your family, but this is difficult to do if you don't know how much things cost. Pick up the phone and start making calls. You'll need your budget to be as accurate as possible to keep your spending within reasonable limits.
Write down what you do know. Chances are, you have at least a few set expenses every month. Things like your phone bill, cable service and child care are probably set in stone. Figure out how much of your paycheck goes to known expenses.
Pick up the phone. If you are new to the area and unsure of the cost of living, do your research. For instance, you might call a list of 30 apartments in different neighborhoods to find out what the average rent is for a three-bedroom unit. You might be on the phone for a while, but it is better than overpaying on rent. You can do similar comparison shopping for other expenses, such as utilities, cable and day care.
Ask questions. Another way to research costs is to talk to friends and family. It might seem rude to ask, but close friends may be willing to discuss their own budgets in order to help you out. Talk to your friends about their experience shopping at bulk food stores compared to a regular grocery store. You might even ask about the expense of cloth diapering versus disposable diapers. You'll spend approximately $1,600 to diaper a child for two years in disposables, according to the Real Diaper Association, so it may be worth considering other options 2.
Go window shopping. Make a trip to the store with a notebook and pencil -- but no wallet. Write down all the things you'd normally buy and their prices. Make a note if there is a generic, cheaper version you could purchase instead. When you get home, review the list and eliminate items you can live without.
Keep receipts. For one month, keep receipts for everything you buy, from gas to baby food. At the end of the month, organize the recipes into categories and tally your expenditures. Look for ways you can trim your expenses. For instance, you might notice a lot of receipts from after-school trips to fast-food restaurants. Save money by packing snacks for your kids. Repeat the experiment a second month, and assign whole dollar allotments to each of your categories. For instance, you might budget $800 for groceries and $400 for gas, based on the receipt experiment.
Leave some wiggle room. Unforeseen costs can blow your budget if you're not careful. Allot several hundred dollars for miscellaneous expenses. That way, you'll have the money for items you don't know about at the beginning of the month, such as a raffle at work or a birthday present for your child's friend.
Take advantage of online banking. Many banks offer ways for you to track your spending by category. With the click of a mouse, you can see exactly how much is going to rent, groceries and recreation. You may also wish to invest in budgeting software.
Use the 50/20/30 rule to set up your budget. No more than 50 percent of your income should go to essentials, including groceries and housing. Twenty percent should go to financial priorities, including savings, loan repayment and retirement, and no more than 30 percent should go to lifestyle choice expenses, such as child care and a gym membership.
- Use the 50/20/30 rule to set up your budget. No more than 50 percent of your income should go to essentials, including groceries and housing. Twenty percent should go to financial priorities, including savings, loan repayment and retirement, and no more than 30 percent should go to lifestyle choice expenses, such as child care and a gym membership.
- Digital Vision./Photodisc/Getty Images