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By Little Mummy, January 11, 2010 5:07 am

It’s a new year and most us have set financial goals whether that’s saving for a holiday or a new car, paying down debt or, if you’re lucky investing. This year I’m having a ‘quiet’ year, in other words I’ll be paying off debts and trying to build up some savings after the extravagance of last year (several trips away including a two week holiday to Disneyworld) I’m sure many will be focusing on this given the economy.

I’ve had many ‘systems’ in the past for maximising the household budget from the ‘if it’s in the bank then we can spend it system’ to the ‘account for every penny in a detailed spreadsheet system’. I currently use a system whereby I calculate my projected expenses for the year, allow for a monthly entertainment budget and then set that figure aside weekly. The rest goes towards paying debts or accumulating savings. I’ve found this to be the simplest and most efficient way to manage the household budget, it doesn’t allow for much wayward spending and monetary decisions need to be made consciously (no mad spending sprees at chez littlemummy I’m afraid). On the plus side I do feel that we get a lot of ‘bang for our buck’ especially in the entertainment category as we’re always looking to get the best value (note: this doesn’t always mean the cheap option, often it’s the opposite).

Do you budget? How do you manage the household income?

Comments (4)

By Little Mummy, May 12, 2008 6:16 am

ACF stands for America’s Cheapest Family by the way, it’s a book I bought last year after it was given a positive review at The Simple Dollar. The book covers all aspect of saving money and spending wisely, one of the biggest takeaways though has been their budgeting system.

Like most people (I think?) I used to muddle along and as long as my bank balance was ‘in the black’ I thought I was doing just fine, until of course the car broke down and we hadn’t accounted for the unseen cost of repair, which is where it all starts to get complicated and stressful if you don’t have savings. The ACF budgeting system takes into account these seemingly ‘unseen’ costs and factors them into a budgeting system that is easy to use and provides piece of mind that when something unexpected happens the funds are there to take care of it. Sound good?

I manage my budgeting system in a (very) simple spreadsheet (no formula required! Unless you want to). Along the top I have all the categories in which we spend money, ie insurance, clothing, car, mortgage, food etc.. I take the projected annual cost of each category and divide by 52. The amount left is the amount I must put into that category or ‘account’ each week, we are paid weekly, you may choose to do this part monthly. The projection is easy to figure out if it’s a monthly direct debit I times by 12 then divide by 52. If it’s something more difficult like the car (which includes repair!) I allow for the most expensive car repair we’ve had (£650) and then divide by 52 and hey presto. For household maintenance I allow around 1% annually for the value of our home which is a generally accepted amount ie if my home’s market value is £100,000 then I allow £1000 per year, which sounds about right.

So as we are paid weekly (and this is much easier if you have internet banking), I breakdown the pay into these categories, leftover money is put into a seperate ‘frivolous spending’ account. All bills and spending which is accountable comes out of the first account, I manually minus the money out of the categories each morning. This sounds like a complicated process, but in reality it takes me around five minutes or less each morning.

I’ve been testing this budgeting system for nearly six months and I can honestly say I’ve never worried less about money. I’ve nearly always kept savings for unseen disasters, however, it’s all too easy to spend those savings, not when you’re using this budgeting system, it’s easier to realise that eventually these ‘unseen’ events will happen and that you’re actually just saving up for when they do. Instead of the event being a financial disaster it becomes just another bill, one that you’ve already budgeted for! Now that the routine is in place it’s so simple to manage that I can’t ever see me not doing it now.

How do you manage the household finances?

Comments (7)

By Little Mummy, May 4, 2008 10:04 am

There’s been a lot of coverage recently about an impending recession, the american mortgage crisis, and the rising price of food and fuel. Is there anyone who hasn’t given at least a quick thought to their monthly budget and looked for where they could trim some fat? I have, and I’ve also been wondering how I’m doing with my food budget compared to everyone else. This isn’t an opportunity for one upmanship, I’m actually more interested in finding those who are spending less, and how?

Please answer the following questions either on your own blog (and link here, so I can find you) or in the comments.

Here are the questions and my answers.

1.) Predominantly, where do you shop? Tesco

2.) How often do you shop? Weekly

3.) How much (on average) do you spend? £60(this includes household products and nappies)

4.) How many people are you buying for? 2 adults, one infant

5.) Do you do any of the following – meal plan, make a list, have a budget? Yes to all

6.) If at all, how have you tried to lower your spending on food and household items? I started meal planning and buying online to keep my costs down, recently though I have had to increase my budget from £50 to £60 as I was really feeling the squeeze.

Thanks for taking part.