Conference turris::womannotes-v2

    Virginia, my use of a budget is primarily as a tool to control cash
    flow.  It helps me to know what money will be coming in when, and what
    money needs to go out when.  I seldom get the "discretionary spending"
    part right. :^)
    
    What is helpful is to go back through your checkbook and see what
    categories of things you spend money on every month.  They pretty much
    break down into fixed-payment and variable.  There are also some
    commercially-available charts from office supply houses that show
    categories. Include items such as entertainment and gifts.  It's easy to
    forget parking and tolls and dry cleaning bills, but they all add up so
    I stick them in the budget.
    
    One thing I've found useful is to move a variable payment into fixed
    payment.  I called the electric company and had my monthly bill put on
    budget billing.  This is the time of the year when you can do that, by
    the way....before the winter heating season.  I've also done this with
    car insurance.  It used to be paid once a year in an enormous killer
    bill; now I spread it out into even payments.  I escrow house taxes for
    the same reason.  I know there are those who will tell me that I could
    be making interest on that money, to stick it aside.  I don't.  I
    congratulate those who do.
    
    Then there are things that are not weekly/monthly, things like car
    registration and residence taxes, etc.  For those things, you can
    either do a monthly set-aside or use the 4-week/month system.  In that
    system, you only budget out four paychecks every month.  So, once a
    quarter you should have a "free" paycheck that is not allocated.  You
    can use that to pay infrequent bills or to put into a special savings
    account.  Also, if you have "extra" money at some point, think about
    the things that you can do with it that will prevent problems (and big
    bills) later:  preventive car maintenance, preventive house
    maintenance, setting aside a couple cords of wood or filling the oil
    tank or buying coal.  
    
    What I've learned over the years is that a budget does not need to be
    perfect, but it does need to be.  When I stop doing one for awhile, the
    money just seems to sift through my fingers.
    
    happy budgeting,
    Marge

    First spend a couple months charting what you DO spend $ on (you might
    be surprised, as I was.... to find out where the $ goes).
    
    I tend to categorize by the following:
    
    Charge cards
    	A
    	B
    	C
    Phone
    Electric
    Mortgage/Rent
    Loans (personal, car, etc)
    Groceries (weekly allotted $ plus any in-between trips)
    Other monthly bills
    
    After charting where you money goes each month, try to start a month
    by figuring out your monthly income, and then a list of all bills.
    Give yourself an amount for groceries each week, for example, based
    on what you figure you spend on average (from your charting). Also
    include a column for miscellaneous (haircuts, birthday gifts, etc.)
    
    I have a Day-Timer calendar, whose box contains a years worth of budget
    folders, one for each month. I tend to use those to collect by bills,
    and figure out how close I'm going to come to broke each month.
    
    --Lynn
    

    My mother has always used the cigar box approach.  She has this cigar
    box that is divided into little boxes, and every week she puts a
    specific amount in each box for all the expenses such as oil,
    insurance, groceries, electric etc.  Anything that she and my father
    spend money on has a space in that box.  I do the same thing, except I
    do it in my checkbooks.  I have 3 separate checkbooks. For instance, one
    is for all house expenses such as mortgage, insurance and taxes, and that 
    gets a specific amount deposited every week through payroll direct deposit.
    And I have another one for general purpose which pays all the bills and
    weekly expenses.  That way, I know that I always have enough for the
    large bills, and the discretionary spending comes out of the general
    account, but I can easily see if there is any money for things out of
    the ordinary.  
    
    I know people who have set up spreadsheets and recorded every
    expenditure down to the $0.40 for coffee they spend daily just to get a
    handle on the expenses.  Once you know what your spending habits are
    and where the money is going, it is a lot easier to budget and know
    where you should cut back.  
    
    I would agree with some of the previous responses that said you should
    first see where you are spending before you try to set up a budget. 
    Then I am sure that you can take some of the suggestions given and
    arrive at the best method for you.
    
    Regards,
    Cathy

    Is it all trial and error?  Pretty much.

    The first thing I did when trying to set up a budget was to
    go through the checks written during the previous year, try
    to determine what category a given check fell into, and note
    the $.  I also looked at the past year's credit card
    statements and broke those down also.

    Naturally, my incentive for doing this was because my
    finances were in trouble -- and when I examined the previous
    year's checks and credit card statements, it became quite
    clear that for that year I had spent more than I had earned.
    Hopefully you won't be in quite that bad shape!

    If all the money you spent last year was less than your
    income, then you might try just setting up categories with $
    amounts approximately the same as what you spent last year,
    divided by month or week or whatever budgeting period you
    want to work with.  If (like me) you spent more money than
    you brought in, take a good hard look at which of those
    things are "luxury" items you might be able to reduce.

    If it helps, these are some of the categories I use:

    Home Regular expenses (mortgage, gas, water, elect, etc)
    Home Irregular (home improvements, dry cleaning, insurance, etc)
    Groceries
    Books, Magazines, and Audio
    Entertainment (mostly eating out)
    Furniture
    Vacations
    Savings
    Gasoline
    Personal allowance, includes subcategories:
	Clothes
	Car (insurance, loan payments, prop tax, occasional tune-ups)
	Gifts
	Medical
	Business expenses for which I get paid back
	Miscellaneous (mostly cash withdrawals for lunch and stuff)

    I find I periodically need to review both the categories (do
    I need to divide something more finely?  can I combine two
    little-used categories?) as well as the amounts budgeted. At
    the end of each budgeting period (I work on months) I total
    all the amounts going "in" to a given category (typically
    only the amount budgeted), total all the amounts spent, and
    write down the difference, noting plus or minus.  I do this
    in a different color ink, so I can readily see each month's
    summary.  Thus at a glance I can see whether any given
    category is steadily losing/gaining.  I need to re-budget
    every year or so, although I did it every several months at
    first while I was still figuring out what I needed to do.

    -- Linda

    We do pretty much what the other notes have suggested as far as
    writing down our income and expenses.  Income comes from him and
    me; outgo is in three major categories:  family, his personal, and
    my personal.  We use separate accounts for things like everyday
    household, long-term savings, short-term savings (this year's
    vacation, new carpet, that sort of thing) and personal.
    
    Every year or two we do it over to see if our present budget fits
    our present needs.  Last time, for instance, we started putting
    serious money into a college fund, now that eldest is 15 and
    talking graduate school in marine biology.  
    
    When I first discovered that while I didn't mind living hand to
    mouth, it wasn't a good way to raise a daughter, I foundered on
    "should."  I tried to have the kind of budget I thought a
    responsible mother ought to have, but I couldn't stick to it until
    I finally acknowledged that if it came right down to it, I'd
    rather do without a telephone than without blowing $$$ every
    couple of weeks at the bookstore.  I'd rather skip lunch for a
    week than skimp on office supplies for my writing.  Once I
    acknowledged that, and provided for it, I was able to make room
    for the necessities, too.
    
    Now that we have more cash flow, we've found it useful to use cash
    for personal expenses and eating out.  We still sometimes
    overspend, but when you have to stop at the credit union or the
    check-cashing window at the grocery store to get the money before
    you spend it, you're at least aware that you've gone over budget. 
    When we use the plastic too much, we usually don't realize it
    until a month or more later, and by then the next month is usually
    over budget, too.
    
    --bonnie

    I've never made a formal budget.  I think I am kind of afraid to.  My
    ex-husband was always wanting me to budget every penny, so he would
    know where it all went to, even when when he was unemployed, because he
    didn't want me to have a cent left at the end of the week to buy
    anything for myself, or, worse yet, my family (he hated my mother - it
    turns she wasn't too fond of him either, but she is more polite...my
    mother is a smarter lady than I was when I got married the first
    time!).  He got furiously angry when I bought a $50 wedding present for an
    old high school friend, and insisted that I not attend the wedding (I
    went anyhow, by myself).  Sigh.  He'd get real upset after, having
    divided the weekly allocation of money in two, and then spending "my"
    half on groceries, I would have to get some of "his" half back to buy
    gas by the end of the week since he would not have spent all of it - he
    used to eat out for lunch all the time, whereas I have always been a
    member of the brown-bag brigade (and still am - you get healthier food
    that way, as well as conserving money) -- this was while I was working
    and he wasn't.  (Looking back on it now, I don't know why I ever put up
    with this!)  So thinking of making a budget makes me feel defeated,
    like giving in to his ideas.
    
    He's long gone.  But I still don't make a budget.  I just balance my
    checkbook to the penny every time I get a statement, and I pay ALL the
    household bills - Paul has his own account, which he does not balance,
    and he buys most of the "fun" things (usually I think what he buys is
    fun, too, and he has much more imagination than I do about such things
    - it wouldn't occur to me to buy and fix up a broken pinball machine,
    for example - they turn out to be a lot more fun if you can play them
    in your own basement, and if the quarters you put in the slot come out
    the bottom!).  That way, no checks ever get bounced for important
    bills, and we still manage to have fun.  But I couldn't tell you what
    percentage of our money goes for paying the electric company and so on.
    I do sometimes get upset because when all the bills are paid there is
    no money left in my account to buy stuff for just me - but usually he
    buys more interesting stuff than I would have anyhow, so it generally
    works out for us.
    
    /Charlotte

    Today's Boston Globe Money section is devoted to budgeting, personal
    financial planning and insurance.  It gives a little worksheet and some
    helpful hints on budgeting.  It might be worth browsing through to help
    with setting up your budget.
    
    Cathy