Love your book “Cut Your Grocery Bill in Half” and love both of the audio seminars (groceries and budgeting) I bought from you too! They really motivate me. I am pretty good at managing a frugal food budget and we also have a nice garden that produces enough food that we can preserve some.
Here’s my question: what is a reasonable budget for groceries and for restaurant meals for me and my husband each month (we’re in our 50’s)? We lump all food (eating out or at home) together and also any household supplies.
Thanks for the great job you do for all of us!!!!
It’s so hard for us to give you a specific number for what you should be spending. It’s all a factor of: Your earnings, current fixed expenses (house payment, insurance, car payments if any, medical expenses etc) and your dietary needs.
For groceries, the average we’ve seen for “non-frugal” families is about $200 per person per month—for you and your husband $400 per month. By contrast we spend about $70 per person per month
We would definitely have separate budget categories for groceries and eating out.
For groceries start with what you are currently spending and evaluate if you think you could spend less by being more disciplined or shopping smarter. Then use the savings to fund debt reduction, retirement, vacation or a special event.
As far as eating out, again that’s going to be determined by your other expenses. If you’re trying to reduce debt or pay off a house, then you might want to spend less on eating out. If you’re debt free and have built your savings and retirement plans, then you may feel free to spend more. Regardless of what your financial situation is, we’ve always tried to limit eating out to special occasions or date nights rather than making it a weekly default just because we don’t want to cook. We do this for two reasons: 1) It’s so expensive and; 2) it’s hard to eat a healthy diet when you eat out often.
We’re not talking about feeling deprived; we’re encouraging you to live on purpose—making choices that benefit you physically, emotionally and financially.
October 5 - 11, 2014 is National Fire Prevention week. Keeping your family safe and your home protected is important, but it doesn’t have to be expensive. We have installed battery operated smoke detectors in several rooms in our home. Whenever we dust the house, Steve reaches up and tests the smoke detectors. We usually have to replace the 9 volt battery about once each year. That’s a small cost for peace of mind.
Take time this week to do an assessment of your fire saftey equipment and plans. You might consider a visit to a fire house too - our firemen and women are wonderful protectors of our communities and our property!
OUR VAN CAUGHT FIRE!
We had to use a fire extinguisher back in 1994 when our 1986 Ford van had an engine fire in the parking lot of a McDonalds in Blythe, California (we actually stopped in there last week on our way back from California - it's remodeled, but still brought back powerful memories). We were on our way back from a Disneyland trip in December. Steve was in the restroom with two of our youngest sons when Annette burst in the door (yes, she came into the Mens' room) yelling, “Steve the van is on fire.” Steve bolted out of the door and ran to the van.
Question: I am trying to fill out the Income/Outgo and Stewardship forms from your America’s Cheapest Family Budget System. My question centers on the "Monthly Allocation" and "Pay Check Allocation" amounts. We are a single income family and my husband now gets paid weekly instead of monthly. Since some months have more than 4 pay periods what is the best way to figure the amounts for the budget forms. It's confusing to me. Do we divide the categories by 12 months or 52 weeks?
Answer: Using the Income/Outgo Sheet is the starting point of establishing a budget that works for you. The idea is to get close to the right amount for each category on a monthly basis and to set up the right number of categories for your household’s spending.
The “nitty-gritty” detail of the number of paychecks and the specific allocations come into play when you actually set up your budget accounts and start distributing paychecks.
Is this making sense?
Here’s an example:
Budget Category: Vacation
Monthly Budgeted Amount: $200
Annual Budgeted amount $2400
If we were paid on the 1st and the 15th of the month we would allocate $100 per pay period to be saved in the Vacation account.
But if we were paid every week and did our budget every other week we would allocate $93 each period. ($2400 divided by 26 budget periods).
If you do this same calculation (Annual Amount /(divided by) 26 weeks) for every budget category you will find that you have a good amount of excess to manage. If you don’t do this, but keep your budgeted amounts divided by 24 (vacation at $100) and you do your budget twice a month, you’ll discover that you have extra paychecks two times a year. That can be a good thing, but it can also waste money because the extra might be looked at as “bonus” money and spent carelessly rather than managed to reach goals.
Image courtesy of Stuart Miles/FreeDigitalPhotos.net
I have read a few of your books and they have immediately opened my eyes to different ways we can help ourselves become more economical.
The end of last year I started to look at budgeting our money so that we can pay off those pesky credit cards, loans, and other debt. My wife and I each have incomes that don't fluctuate much so we can predict what each paycheck is going to be. I also have a side job that brings in extra money each week.
My first goal for the New Year was to get rid of credit card debt. We’re off to a good start: we eliminated two in the first month and scheduled a third by next month. Using QuickBooks I figured out what we earned and what we paid out last year, so I was also able to figure out what percent each expense was of the annual income. I looked at the expenses and grouped them together. Then my thought was simply to use a spreadsheet to calculate how much each category was of the biweekly paycheck.
Here is my dilemma: Originally when I first read your books I was just cutting my bills in half and was taking a little out of each paycheck and this worked great. But now I want to start saving money for future goals and those pesky annual bills and things like vacations, instead of scrambling at the last minute.
For instance our Mortgage is $1568 (includes taxes, insurance and principal). Half of that amount is $784, however the percentage of the annual budget is $568.00. Another example is Groceries. We have cut our bill down from $700 to $900 each month down to $600 per month for a family of four by eliminating our extra trips to the store. That amount would be $300 per paycheck but based on the percentage of the budget it is $216.
My overall question is: What should I do?
o Cut all of the bills in half each per paycheck and then save what is left over for annual expenses?
o Or should I continue using the percentage of the annual budget and know that it will work itself out over time.
Thanks for taking time to pose such a specific question.
First off, you are doing great. Using any type of money management system on a consistent basis is going to help you make progress. The discipline is already paying off in eliminated credit card bills.
We wrote about this in our first book, America’s Cheapest Family in the utilities chapter:
“As with other budget categories, we save a pre-determined amount of money from each paycheck to cover our utility expenses. We have calculated our costs on an annual basis and divide the total by 24 to know how much to save each paycheck. (If you get paid every other week and reconcile your budget every two weeks, you’ll want to divide by 26). Because of our system and the mild Arizona winters, we always accumulate excess in our utility account as we head toward the summer — usually $500 to $700. This money will be slowly depleted by our higher summer utility costs.”
Basically by fine-tuning your budget to match your paycheck cycles you can make your money go further as dividing by 26 results in a smaller amount going into each category with each paycheck. This actually frees up money to be used in other ways.
It appears that you don’t have budget categories for annual expenses like vacations or “pesky annual bills.” We handle those by creating a specific budget account for “VACATION” or “CAR REPLACEMENT” or “PESKY ANNUAL BILLS” and with each paycheck, we put a little money in those categories. When the annual expense, or as in the case of car replacement, an expense that occurs every 5 or 7 years, occurs we have a good sum of cash Read More...
Question: Can you give any advice on who to use for estate planning? A lawyer, an accountant, or financial advisor such Edward Jones?
Answer: When making these types of decisions we always consult with several sources (state advisory boards, trusted bankers / financial advisors) and especially friends who have worked through these issues before us.
We wouldn’t go to a financial advisor who could benefit (receive commissions) from moving our money around. Look for someone who has no profit motive from using your money and who comes highly recommended.
Ultimately, if you’re setting up a trust, a lawyer will be necessary. But a good accountant, who can help you structure your assets properly, would be a good place to start also.
Take your time, do lots of research. As you go through the process, you’ll learn what questions to ask and what the most valuable skills to look for will be.
Definitely honesty and integrity would be on the top of our list.
One of our favorite books on the subject of estate planning is “Beyond the Grave”
Let us know what you learn!