How to Create a Budget

Knowing how to create a budget is important, even essential, for financial success. However, it’s not often taught in high school or even college. Many people begin married life with no concept of balancing the budget, or sticking to a spending plan.

How to Make a Budget presents the basic steps involved in budgeting your money. Rather than repeat the whole article, I’ll simply summarize the steps:

1. Create a list of all set expenses and estimates for groceries, gas and personal.

2. Tally your income, from all sources.

3. Compare the two numbers. If you earn more than you have listed under expenses, allocate the “extra” for savings, investing, and charity. If you have more expenses than income, trim your expenses (or increase income–fast!)

4. Hold a weekly budget meeting with yourself (or your spouse if married) and stay accountable to your spending plan.

As the saying goes … if you fail to plan, you plan to fail. Cliche? Maybe, but with finances as with many other things, it’s true.

Tuesday’s Tips: Reducing Utility Bills

Since the money you get paid for working probably is not going up anytime soon, and if you do get lucky and find a better job or get a raise it probably will not be enough to compensate for the rising cost of living; this week’s tips are on how to reduce utility costs.

  1. Lower the thermostat on your water heater. 120 degrees is safe.  Any higher and you risk burning yourself, and raising your electric bill.  The savings may or may not be noticeable if this is the only technique you employ; but it will make a difference over the course of time.
  2. Keep your indoor temperature regulated. This way the heating or cooling is only running when needed, as opposed to all the time.  78-80 degrees is an ideal setting for comfort and energy conservation.  For each degree warmer you keep your home, you save 7-10% on your energy bills.
  3. Use efficient light bulbs. Use appropriate wattages, or switch to the compact fluorescent bulbs
  4. Grill or Microwave your meals. This uses less electricity, prevents the house from warming up excessively in the summer, and reduces your overall cook time.  Save money on energy and eat sooner?  Win-Win, if you ask me.
  5. Evaluate your Telephone, Television and Internet costs. Make sure you are not paying for services you do not use regularly.  Consider reducing your packages.
  6. Make sure your home is properly insulated and check weather stripping. You do not want to let your air out, and outdoor air in, regardless of the season.  Ensuring windows and doors are properly sealed increases your efficiency.
  7. Limit the time you spend in the shower. The more water you use, the more you spend, so keep it reasonable.
  8. Clean and replace filters regularly. If clogged, dirty, or old, the furnace will work harder (using more energy) to produce the same effect.
  9. Keep lighting fixtures clean. If your fixtures are dirty, your lights are going to appear dimmer, so you may be inclined to increase your wattage, burning more electricity to achieve the same result.

What are some things I’ve missed?  What do you do to conserve?  Share your thoughts below.

Wednesday’s Wisdom: Retirement or College Fund?

Have you ever become overwhelmed at the thought that you are supposed to be saving for your own retirement, and then realized that you technically should be saving for your children’s college expenses, too?

Sometimes, different situations arise that cause you to not be able to save for either one, let alone both.  So, in the event that you can only afford to save for one, how do you make that choice?  Your children are always number one in your life, so it seems selfish to save for your retirement in place of their college, right?  Well, here are some reasons why you should place your needs in front of their own in this instance.  It’s okay if you do not agree, but it is my hope that it will make the decision a little easier to handle.

You spend your adult life taking care of and providing for your children.  You can only work so hard for so long before you have to let your children take care of themselves and focus on yourself again.  Yes, you may be able to (if it exists as an option when you are eligible to retire or receive) get benefits like Social Security.  However, not only is this not usually enough to live on in the first place; it should never be what you rely on anyway.

Your children will better be able to put themselves through college than you will be able to put yourself through retirement.  Your children will be youthful, and working a job to support themselves and their families.  Of course, any college savings you can pull off will help, but it’s not going to prevent them from going all together.  What I mean is that they will be able to afford to put themselves through school because they will be able to work; whereas if you do not have money saved toward retirement, you are less likely to be able to work to earn money to help yourself survive–because the essence of retirement is that you are done working, because you have done enough of it…retiring from your career should never mean that you have to work a less demanding job to compensate for having quit your career.  This is easier for people who are still physically able to work; but you may reach a point where you cannot even do that.  In providing for yourself in that manner, it will assist your children in not having to worry about you; so in a sense, you’re doing more for your children in the long run.

There are loans for higher education, but not retirement.  Your children can get loans to ensure their attendance to college, and deal with paying them back after they have the higher earning potential that college helped them to get.  Yes, they may have trouble paying off the loans; but, you cannot borrow money to live on if you cannot pay it back, you know?

Retirement funds need to last longer. You need more money saved for retirement than college, just because retirement funds are meant to take care of your life the way working does now.  College expenses will cease after a few years, and likely never add up to what you need for retirement anyway.

If you cannot decide which one to focus on, or feel that this reasoning is faulty; compromise and save the amount you planned on anyway.  If you can only afford $50 a month in savings toward one or the other; look at as $25 in each fund.  Then, whatever money you have saved can be used for whatever purpose you see the most appropriate.

What are your thoughts?  Am I wrong in my logic?  Do I sound selfish?  Share your opinions below.

Grocery Bargains – Food Staple: Rice

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There are five main items that I include in my big monthly shopping trip that help to stretch our food budget. With a family of seven I need to cut all the corners I can. About 30 minutes away from us is a store called Cash n Carry that has restaurant supplies in bulk available to the public, no member fees. I go there once a month for main staples. You could go to a Costco or Sam’s Club too.

(This post got longer and longer as I added more ways that we use these staples and a favorite recipe for each one. So I’ve divided this into 5 posts.)

Grocery Bargain: Rice

Black & Decker 20-Cup Rice Cooker - Stainless Steel (RC866)Rice is a good filler that helps me stretch recipes and meals. It doesn’t take much to be very filling. We buy Jasmine or Calrose rice in large 10 lb bags for less than $1 a pound. We usually pre-cook rice in the rice cooker before using it in a recipe. I have to say our rice cooker was one of the best investments we made for our kitchen and has saved us time and money over the years.

Here are some of the ways we use rice:
Spanish rice (the basic kind with a can of Mexican stewed tomatoes, served as a side dish)
Spanish rice (add meat, beans, corn, wrap in tortillia with cheese and sour cream)
Plain rice side dish
Rice made with a can of soup for flavor (creme of chicken with hebs, cream of brocoli, cheese soup, creme of mushroom, etc.)
Rice with stir fry or teriyaki
Chop Soupy (A family recipe grandma calls chop sui but I renamed because it’s watery like a soup. It has rice, stew meat, soy sauce, vinegar, chopped veggies, and sesame seeds.)
Rice casserole (meat, veg, soup)
Beans and rice
Rice pudding