Welcome to Day 5! {Click here to find the topic menu for the entire month along with links to each day.} It's time to take a closer look at some of those more subjective budget categories.
Yesterday we prioritized our expenses by marking the necessities and then ranking the rest according to our individual situations. This was actually fairly easy for me since we're not new to budgeting, we don't pay for a lot of "extras" (cable, kids' lessons, gym membership, etc.), and we've already had to cut back to [mostly] the bare minimum since my husband resigned from his job a few weeks ago.
Today's step is potentially the most time-consuming one so far, but hang in there, because it's necessary. You can't really finish creating a budget until you look at the more subjective expenses for which you don't receive a bill every month. Those would include categories such as groceries, clothing, entertainment, gas, personal care items, gifts... you get the idea.
When you gathered your paperwork on Day 1, you hopefully unearthed some recent receipts. If not, you may have to spend some time over the next few weeks holding on to them so that you can track your spending in these areas. Alternately, if you pay with a debit card, you may be able to get an idea of your spending by taking a look at your bank statements from the past month or two.
For this step, just evaluate and write down an estimate of your monthly spending in these categories and try your best to assess what is spent on needs vs. what is spent on wants. For example, when you look at your Food category, groceries (though not necessarily all, I can say from experience!) would be classified as a need, whereas eating out would be labeled as a want.
Don't stress over getting an exact number for these categories. This is just a snapshot of your spending. As long as you have a ballpark figure, you'll be able to plug it into your budget worksheets and then work from there to reduce expenses and revise where necessary over the next week or two.
If you're working through these steps along with me, I'd love to know!
Please leave a comment and share how it's going.
The framework for this series is being used with permission from Inexpensively.
