Organizing My Household Budget

I pulled out all of my bank statements and receipts all the way back to January 1, 2008 and over the course of three days entered everything into Quicken. I have version 2004. It was installed on my laptop when my laptop was purchased. I knew I needed to take an overview look at my out-going expenses. Remember, I am not employed at this time and I need to know how much money to earn to cover my living expenses: Cash flowing in and cash flowing out; it is like the breath of the household.

Okay, I have calculated that currently a comfortable life style for me and my kids requires earning at least $4,000.00 a month. I will get some child support, but at this point I do not know how much that will be. I do need to find another place to live. The house I am in now is a rental and the owners are putting it on the market. I'll be looking for a new place and decreasing my rent. I need to move by June 30, 2008.

Although my mother taught me all I know about budgeting and I feel I do it very well, I picked up a few books to read up on the latest and greatest in budgeting and financial planning. So over the course of the last six months or so I have been reading. I'll write reviews and tell you more about those books later. And I will also tell you now that I started a women's investment club four years ago ... and I will tell you more about that later too. The books I read were very helpful in planning my monthly household budget. I came up with seven (7) basic groups: 1) Income, 2)Must Have Essentials, 3) Important Essentials, 4) Amusements/Luxuries, 5) Savings, 6) Investments, and 7) Giving Back.

In summary, what this means is that after I entered all of my deposits and receipts, I took a look at my spending habits and determined which expenses are Must Have Essential; the absolute musts like rent, groceries, electricity, auto insurance and so forth. Then I determined what was an Important Essential; important enough to keep, but if I absolutely had to I could eliminate like the cell phone, education costs, gifts during the holidays and birthdays, recreational fees for my kids to play sports and things like that. Next, I determined the Amusements/Luxuries. These things are all about having fun which is very important, but in a crunch I can go without for several months like, dining out, going to plays, weekend outing, vacations, pedicures and so on ... Now you might really feel a pedicure is an Important Essential rather than an Amusement/Luxury or an automobile is an Important Essential rather than a Must Have Essential. Then you would determine what works best for you; what suits your personality and life style. The group called Savings is for saving for those big ticket items that I dream of having like a newer car or taking the kids to Hawaii. The group called Investments will be used for future investing. This is my path to financial freedom and I'll talk about that later. And last but not least is the group for giving back. I want to donate to causes and programs I believe in on a regular basis.

Please note that I am all for and have the mind set to generating more income rather than cutting back. But it is crucial to know where the money is coming from and where the money is going to in order to set goals and plans in place to generate more income.

In an upcoming article, I'll talk about how I divide up the income to feed each group I defined today and share a little about financial goals.