Mr. Frugality: Building a Budget (The Basics)

The dreaded B word. The B word will keep you living happily.

A budget is a plan that allots for a certain amount of money to go towards a specific goal. This word is absent in the vocabulary of the US Congress. To model an easy example, we will go over a budget that I am recently constructing, and I will go through how and why. You know me... I like systems... Start with Microsoft Excel. Basic knowledge with this program will take you far.

First, we need to budget the things we NEED. There are two ways to find out what we need, and we need to model them over time. I like to model my budgets on a monthly basis. Sometimes, you may need to budget weekly. It all depends on your life style. I think most people will want to budget on a monthly basis, because bills are due then. To find out what you need, carefully track the goods you need to buy (spending CAREFULLY without a budget), and find out how much they cost. If you can find cheaper brands that do the same thing as the name brand, excellent, that is frugality. Say my grocery bill consists of this, hypothetically (I mostly eat at Tullys):

Assume this is a monthly need of my grocery expenses. Obviously, this isn't an accurate list- you may need more than what I listed here. According to the list, I would spend $78 (before taxes) on food a week. Assuming an average of 4 weeks per month, I would spend $313 a month on food. Some might CRINGE at that number. There is a way to reduce it, and here is how:

If I am in a pinch to save money, the first place to look is where the list is costing me the most money. Holy Bajeebus, look at how much those microwaveable meals are costing me! I calculated that I would need three per week on average. How about we cut one out, and then spend the money on cheaper things that are healthier, such as, on sandwiches? Immediately, we are down to:

We just went from $313 a month spent on food to $265 a month, a savings of $48 dollars a month, and $576 savings a YEAR. This was a good example; but if you want to become anally retentive (I'm just kidding, a "super star" of frugality; you can begin dissecting your budget for cheaper brands that taste roughly as good: Say I found a brand of Peanut Butter and Jelly that was cheaper, and I found snack crackers cheaper than Cheese Nips (I am still reluctant to give up my Nips >_>), Also say that I found a cheaper brand of potato chips:

Well, look at that! I am down to $231.32 a month. Note that when you cut the cheaper things, you will be approaching a finer line. Always attack the money suckers first, but if you need to squeeze money, this is how to do it. This was a basic example of a budget: Budgets apply from everything to grocery lists, to clothes, to BILLs, and ultimately, all of these budgets coalesce into "Budget Grande", the budget where all of these budgets collide, and you can see your [net gain - net loss] for your net profit. Are your numbers black at the end of the month? Good job, grasshopper!