My mother is a financial counselor, so while I was growing up my siblings and I learned a lot about budgeting debt and how to avoid bankruptcy. I though this was normal, I thought that everyone knew how to budget because it was just so simple and easy that, well, everyone should just be able to do it. Then I found out that budgeting and planning financial futures is like a foreign language to most people and if you don’t grow up learing about this stuff, it can be really difficult. So I thought I might share my little bit of knowledge with you all especially if you are just starting out and trying to balance your budget.
First of all if you are just starting out and you don’t know how much things cost (like when I tried to spend only $20 per week on groceries for two people…. just FYI, it’s impossible).
I got this table from irs.gov it shows the national averages of what people/families are spending on basic living needs.
These are not exact numbers for every single state and your house may spend more or less in each of these categories.
Now for actually setting up your budget I recommend actually sitting down and writing down each of your bills and how much they cost.
Here is a list of my household expenses to help you create yours. (The values are for a 1 month period)
- Tithing/Charitable/religious donations
- Saving (10% generally about $280)
- Rent (864, including water, sewer and garbage)
- Gas ($160 for our one car)
- Utilities ($50 for 1,180 sq.ft.)
- Groceries ($300 )
- Prescriptions and over the counter medications ($50)
- Car maintainance (We use this money to either do little repairs on our car or save the money in case we run into a larger repair) (about $100)
- Car Insurance ($33 our car is still insured under his parents)
- Cell Phone ($120, we share a family plan with his parents to keep costs down)
- 401K/Health Insurance (This may be taken out of your paycheck by your employer)(130.36)
- Life Insurance(Is absolutely necessary!!)($9.00, for $180,000.00 incoverage)
- Entertainment ($50)
- Tools (Unless you or your spouse is in a trade you may not have to include this in your budget)($150)
- Renters Insurance ($16)
(Remember this is my personal household of only 2 people, your budget amounts may vary.)
I would like to mention Life insurance and Disability insurance for just a second. the average cost of a funeral in the U.S is
According to the National Funeral Directors Association an average funeral will cost about $7,750 not including a head stone, burial plot or obituary.
Also depending on your age and marital status you might want to decide on how long you want your family to be able to live on the insurance.
Also disability insurance (especially if you are the major money-maker) is important because if you are seriously injured or disabled you will need to be able to pay medical costs and possibly in home care costs depending on your injuries.
Whew! now that you have all that stuff worked out, you have to do the math.
so add up all your expenses and deduct this from your NET pay (Net pay is how much money you get after taxes)
now look at the total, if the number is more zero or above, you are in good shape if your number is below zero you might want to consider adjusting your budget.
If you need some help or advice I would like to recommend my favorite financial counselor.
Sherri Overby, AFC
Here is her contact info incase you need it and she gives free advice over the phone.
Globous Financial Relief
1775 West 1500 South
Salt Lake City, Utah 84104
(866) 977-0555 (toll-free)
Fax: (801) 977-3999
or you can visit her website financialvitalsigns.org
Thanks for reading.