January Money Wrap-up

I am going to write about money and budgets today. I bet that you all simply cannot wait to hear all about it!

Back in late December I resolved that in 2009 I would make (and keep) a budget. And then I engaged in some very exciting navel-gazing about just how I would make that happen. The first month of 2009 has come and gone now, and I’m here to let you know how we fared.

I started my budget project by taking the year’s money numbers from Microsoft Money, and porting them into Excel. Then I created a spreadsheet showing our 2008 spending from each of the categories I created. For fixed expenses I pretty much just used our 2008 number as our 2009 target. In some cases like childcare, I actually increased our budge over 2008 since Jacob will likely be starting daycare sometime in August. And in some cases I was really surprised to see what we had spent, and I cut back.

So where did we overspend? Kid’s clothes and toys, which isn’t surprising given my love of little bitty shoes. We didn’t track our cash, so I was left to guess on some things, like how much I had spent at the farmer’s market and so forth. And groceries, oh groceries, I know we can do better on groceries. My estimate is that we were spending approximately $900 / month on food and personal care, not including eating out. So my big goal for 2009 is to try to reduce that, at least a little.

As a starting point for January we’ve been keeping track of cash, so that we can get a more accurate picture of where our money is actually going. Since we can already track credit and debit, taking it all together I was able to keep track of pretty much every penny we spent for the month. And it wasn’t arduous, it involved maybe 2 minutes a day, plus 15-20 minutes at the end of the month.

How did it go? We came in under $600 for a month’s worth of groceries. Still high, I know, but a significant reduction for us. And we have stayed within budget in every other area too. Mostly it’s happened because of the accountability of the spreadsheet, which is causing me to consider whether I really need or will ever use an item before I buy it. The other thing that’s helped has been cutting down on processed foods and doing more scratch cooking. I haven’t been depriving myself or my children in any way, I’ve just loaded up on less stuff I will probably throw away later.

Back around the time that Jacob was born I read this great book, Your Money or Your Life. It talked about how we trade our life energy for money, and so we should be aware of exactly how much we’re getting for our effort. We should also be aware of how much we’re spending, and what sort of value we’re getting when we do spend. The book outlines a 9-step process for financial freedom. My plan for February is to start implementing some of the steps, and see how that goes. I’m sure that you all can hardly wait for the next very exciting update to hear how I did.

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