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Showing posts with label budgeting. Show all posts
Showing posts with label budgeting. Show all posts
Working with a cash budget (repost)

Working with a cash budget (repost)








































Over the years we have tried many different methods for controlling our spending and working on a budget. By far the most successful method for us is to work in cash. I have worked out what we need each week and I withdraw that amount of money.

The following are our ' cash categories'.

Groceries
Fuel
Entertainment
Christmas
Holidays
Birthdays
Scarlet Ribbon ( clothing shoes etc)
Kids Banking

You can see in the photo that I use resealable plastic bags with the category and the amount written on it. Each week I go to the bank or post office and I have a little card in my wallet that says " 3x $50, 4 x $10 etc and get the exact breakdown. When I come home I give the cash to our young sons and they go through and put the amounts into the bags. Then, when we want to do something like hire a DVD or buy a present etc, we just go to the appropriate bag.

Having the money in cash is great for a couple of reasons. When you have cash in your wallet you are much more careful about spending it. My sons have also learnt the value of money because they control it. We are also empowered by the fact that we have money in advance for needs that may arise.

I call one category 'scarlet ribbon' because of the proverbs 31 woman who has no fear for her household for when the winter snows come her household is clothed in scarlet. It is a very old proverb but one that has always stuck with me.

I have also calculated how much we require for bills. You can do this by looking at what your bills are over a year and dividing the amount by 52 or 26 depending on when you get paid. Then I transfer that amount into an account we use for bill paying.

So.... what do you do when you finally sit down and add it all up and the results are frightening ? When I did this the first time I was totally shocked at our living expenses. Son number one was about 12 months old and I was faced with the prospect of going back to work. I was a school teacher then and was going back to work just two days per week. I hated the thought of it! So, we sat down and worked through everything in a huge amount of detail. I called it my " Plug the holes audit". By this, I meant that I thought the ship ( our house) would sink by the little holes that were in it, not the gaping big holes. So I set about saving money on little things, $2 here, $1 there. I changed phone plans, shopped for cheaper insurance, worked out a price book to track specials and calculate unit pricing, worked a cash budget etc etc. The results were amazing and I gave up teaching at the end of that year.

I often hear people talking about how difficult it is to make ends meet ( while they are watching pay TV and smoking and eating take away food). My answer is to be totally honest with yourself and live within your means. Take control of your money so it doesn't control you. It is such a wonderful feeling to jump in the car and go for a holiday with the freedom of knowing that you have the cash for it all and you won't have to face the credit card bill when the holiday is over.

If you can't be bothered with the hassle of micro-managing it all then you will need to be happy with staying in debt and having no money and having lots of stress. The choice is yours to make, so which path will you choose ?
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A Vision Splendid
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Time For A New Budget

Time For A New Budget



It is coming up to the end of the financial year and time to do up a new budget.

Budgets always need adjusting, they change as family needs or incomes change. As your budget evolves you may notice that you have more than enough income in one category, but are always running out of funds in another category. As seasons change you may have different expenses. In our household winter sports and less water skiing means that one category goes up while another comes down.

I never view a budget as a negative thing. I think it is one of the most powerful tools that a family can use in order to bring peace to a household. Involving your children in the family budget is also a great way to teach them how to save and use their money. My boys have learnt the value of money, for example, if they are putting $15 a week in a particular category then they know how long it takes to save $90. If we want to do something on a weekend they look in the ‘entertainment’ envelope and can make decisions about whether we can order a pizza or go bowling and eat out. There is very little nagging or squabbling because they understand the process.

As my regular readers know, I work with a cash budget because this system works really well for me. I have read about people who budget using a credit card and virtual envelopes and that works extremely well for them. The secret is finding a system that ‘honestly’ works for you. Because of the state of financial markets I am considering parking the ‘savings’ type categories into my no fee investment account to maximise the interest ( a whole 3.5%). If I do this, I will still break it up into ‘virtual’ envelopes so that I know what is what and so I don’t start spending savings amounts or spending bills money by buying clothing. Having said that, the majority of my categories will be cash based. Things like groceries, fuel, pocket money, kids sport, entertainment etc work best if they are in cash for us.

Is your budget constantly changing? Have you noticed that it changes as the seasons change ? Do you successfully budget with ‘virtual’ categories ? I’d love to hear from you.
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A Vision Splendid
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My Grandmother's Money Tin

My Grandmother's Money Tin










































This is the tin that my Grandmother used to organise her bills. Inside, she had an old tray that she labeled with the names of the bills she had to pay. She would then put a little money aside into each category. Simple isn't it ?




She also gave me a collection of the old paper money that Australia used to have. It looks very different to the plastic money we have these days. We also no longer have a one or two dollar note. They became coins in the mid 80s.






Hubbie and I were discussing how we used to have pay envelopes that had 'actual' money in them with a hand written pay slip. Hubbie remembers keeping so much of it for 'spending' and then banking a portion of it, using his bank book. He said you would put the money in your bank book and put it through a little slot like a slippery dip and the teller would process it and call your name to come and collect your bank book.


Very different to our world today of 'virtual' money. Today you can go to work, get paid straight into your bank account, pay for things straight put of your bank account and never actually 'see' your money. In fact you can work for years and have no idea of how you are actually going. Sure, we get pieces of paper that tell us how we are going, but how many people sit down and add up this account and that account to see whether they are getting ahead, treading water or sinking fast!


Gee times have changed. Have they changed for the better for us as consumers? After all, this 'virtual' money was sold to us on the basis of how convenient it would all be. I am guessing, however, that you and I are not the winners in this new system.

I wonder how we would protect and guard our money if we were given it in a little brown envelope and told 'that has to last you the week, so be careful with it'.
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A Vision Splendid
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I'm Taking My Sanity Out To A Movie

I'm Taking My Sanity Out To A Movie



After reading one of Anita Bell’s personal finance book I introduced the idea of sanity money to the household. This is an amount of money that is allocated to you personally that you are allowed to do anything you like with. When you first start budgeting and you find it quite restrictive, you may allocate yourself an amount of sanity money that, whilst being restrictive, you can actually live with.

Over the years, my sanity money has dropped down to $10 per week. It seems I have weaned myself off buying things to make myself feel better or feel less deprived. I often don’t spend all of my sanity money and have some ‘carry over’ amounts which build up. Other weeks I blow it all on my addiction, - my signature vanilla latte on skim. The more I space these coffees, however, the more divine they are to sit and sip.

It’s important that you have sanity money, for without it you go mad! You start buying things willy nilly because you are not allowed to. When you are given an amount to simply blow on magazines, lottery tickets, coffee, wine or cigarettes you find you are a little more careful with it.

I keep mine in this ridiculously small old style purse. It reminds me of one my Nanna F had, before the days when you have to carry around 125 different plastic cards. The purse is so tiny I can’t even fit a credit card in it ( he he he I am outwitting myself! ) But it’s MINE! All MINE!!!! ( I say as I rub my hands together evilly) My other ‘sensible’ mother type purse has all the cards, library cards and all the household money for when I am shopping, putting fuel in the car etc.

So tonight I’m taking out my ridiculously small purse and I’m blowin the lot! ( she says now, but will probably be rather conservative when it comes to the crunch) I’m taking my sanity out to a movie with a girlfriend and will probably then paint the town red ( meaning will most likely have a hot chocolate after the movie) so…. Look out…… I’m gonna kick up my heels!
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A Vision Splendid
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