>>Do you have a budget? If so, how did you create your budget?” 

The answer is yes, I do keep to a budget, but since there are a few steps in beginning to budget, in order that this will be of help I’ll start at with the first thing first.

The very first thing you need to do is track your spending – every penny of it.  If you use debit and credit cards exclusively, this will be very easy.  Take your last three months of bank/credit card statements out.  If you use any cash at all, make a note of this, too, no matter how small or insignificant it seems to be.  Twenty dollar bills get frittered away with frightening ease with nothing to show for it, and you need to know where it’s gone.  Then , write down exactly what you spent and what it was spent on. 

After you’ve written everything down, look at where your money went.  You’ll see some categories emerge – food, bills (each one should be it’s own category), clothing, transportation, gas, medical, etc.  Write down each category at the top of a paper, and then write down under it the expenses that relate to that.  If you have so many things that you find the expenses hard to categorize, that’s fine. More categories will probably help you keep things clear than fewer.

Once you’ve done this, total up how much you’ve spent in each category.  This will give you a very clear idea of exactly where your money is going, and you must know what your real spending is and where it’s going.  Someone with six kids a couple of months ago told me she spent $150 a week on food.  I told her I’d love to hear her tips because she’s clearly using a lot of frugal strategies to achieve that.  She looked surprised and told me she wasn’t especially careful.  I right away knew that she had no idea what she was really spending.  About six weeks later we bumped into each other again, and she told me that she was totally wrong, that she spent significantly more than she thought (as in $400 a week).  But it wasn’t until we spoke that she started to pay attention to it. 

You can see how it’s going to be hard to budget successfully if you think you spend $600 in a given category, and are really spending $1600!  And it’s also going to affect your receptiveness to getting your costs in order, if you think you already are being careful.  (Here’s something I’ve found – most people think they are pretty reasonable in their spending, regardless of their debt loads.)  So reality is important to have on your side. 

Here are my categories: maaser (tithe – this gets taken off the top before anything), mortgage, car insurance, telephone, gas (for the vehicle), gas/electric, life insurance for dh, life ins. for me, transportation (for dh), midwife (she’s wonderful about letting me make monthly payments instead of one large lump sum), clothing, savings.  I have specific categories at certain times of year for holiday expenses that I determine in advance (before Purim includes mishloach manos, matanos le’evyonim; Pesach includes shmura matza and other related expenses).  I also have a miscellaneous category, but I don’t suggest you do that until you’ve been tracking your spending for a while and are already very careful with your money.  It’s too easy to get sloppy about that.

 Don’t be afraid of this step.  Once you know what you’re spending, then you can start to have fun slashing every single category.  There are so many frugal strategies in every area of life, and it’s very exciting to see how much less you can spend without compromising your quality of life.  In fact, living responsibly within your financial means and utilizing your creative side to do that not only doesn’t compromise your quality of life, but greatly improves it!  As I’ve said before, frugality isn’t about doing without; it’s about finding out what’s most important to you and making sure your spending responsibly reflects that.  It’s definitely a lot more fun to live debt free, knowing when you spend on something that you really have the money to buy it and to find alternatives when you don’t have the money, than to live in denial. 

Avivah