Showing posts with label budgeting. Show all posts
Showing posts with label budgeting. Show all posts


The 6P Principle

6Ps = Prior Preparation and Planning Prevents Poor Performance.

I have written before about my Grandmother's ' one up' principle, that is, you have a spare of everything in the cupboard and as you finish one off you get another one to replace the spare so that you never run out of anything. 

This week I have made a list to fully prepare my stores cupboard.

I have worked out my usage, for example, I know that at all times I want a container ( 3kg) full of flour as well as 4 1kg bags in the cupboard.
This will take me some time to finish because I will only stock up when the products are on sale. The overall aim is to never pay full price for anything again.
If you watch the sales you will see, for example, that Vegemite may come on sale every 6 weeks and you may know that you go through 3 jars in that time, so I would buy 3 when they are on special.

If you let your items run out or run low, you will have to buy them when you need them rather than when they are on sale.

If you use the store cupboard idea of stockpiling, you will eventually get to the position where you only buy sale items each week.

This will cut your grocery bill dramatically. If anything unforeseen happens you always have your insurance policy.
 We all think that a ' disaster' will not happen to us, but sometimes it is the simplest thing that can cause problems, like blackouts from storms or floods.

 If there is no power, the doors of Coles can't open ! I wonder how many people were caught by the flooding around Newcastle - not caught by flood waters but caught by the shut down of services.

 The moral of the story always comes back to the 6P's.

The 6 P principles is the answer to how can you get ahead and work towards never paying full price for anything ?


Working with a Cash Budget

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'.

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 ?


A Little Light Reading

Do you know that if you want something you should always start by ' putting the word out'. Someone will always know someone who has what you need.

Rather than spend money, ask what already exists in your circle.

Using this principle I was able to gather all this reading material. I also got some from the local library. Your local library is such a brilliant resource. Check it out.

I am excited by the prospect of reading these books. I love being inspired.


Christmas in July

No I am definitely not talking about those functions and parties everyone seems to be going to. 

Perhaps I should call this post THINKING ABOUT CHRISTMAS IN JULY. 

Most people ( me included) start complaining when Christmas decorations and 'gift idea' catalogues start appearing around late September. But the strange thing is that many people leave their gift shopping until the last minute and have to battle the crowds and are left with the age old dilemma of what to buy people in your family. You even hear them talking about what you buy the person who has everything !!!! ( Isn't the answer obvious ??)

I want to start thinking about Christmas so that there is no rush. Without prior preparation and planning we end up buying complete rubbish and maxing out credit cards buying STUFF for people that already have enough STUFF.


So, remember the phrase Prior Preparation and Planning Prevents Poor Performance (The Six P Principle).

Think about these things: 

1. Who do you want to give a gift to. Make a list

2. Will you make a gift or buy a gift.

3. If you start now there is plenty of time to make thoughtful gifts

4. If you don't want to give STUFF then do what I have done for the past two years - buy a goat in a village in Bangladesh in the recipients name. Last year we purchased school books, a water well for a village and a toilet. Visit Tear Australia and get a copy of their "World's most useful gift catalogue".

Anyway, the challenge I put to you all is .... be prepared. Refuse to be sucked in to the marketing concept that people will know you love them by what you buy them. 

Think carefully. Start your purchases now. Mail order from small Australian business houses. Make thoughtful ethical purchases or make it yourself ! Nothing says I love you like the investment of your time !!!!

Let me know your ideas for gift giving or home made gifts.


Living Simply Challenge Update

It has been extremely satisfying doing this challenge. Some things we have achieved, others we haven't attempted yet, but it is all a step in the right direction.

Here are the preliminary results:

* make up a food budget and take only that amount of money to the supermarket with you. - Done. I have $150 for groceries and this week spent $114.00. This is more than last week, but it includes extras for my grocery stockpile.

* create a menu plan for the week so you know what you need to buy for each meal. DONE - this not only saves you money , it saves time and your sanity because it stops you from getting to a weeknight later in the week and asking ' what on earth are we having for dinner tonight ?

* start tracking your spending. Done - usually do this anyway.

* start a grocery stockpile. I like this one and have done it at varying times over the years. My Grandmother always had a ' one up principle'. She had the item that she was using plus at least one more of it in the cupboard. When you finish the one you are using you put it on the list, start using the spare and then replace the 'one up' item.

* cook from scratch. - have been doing this for a while no.

* ban yourself from eating out or buying takeaway for this entire week. failed this one because I had to go to a farewell dinner on Friday night. I did only spend $20 though and that included a tip !

* shop for specials. - I always do this. I have had a price book for years. I will post some pictures of it soon.

* make your own shopping bags and fruit and veg bags so you're not bringing home plastic bags. Taking your own shopping bags is easy. The only problem that I have is bags for the fruit and veg. Loose potatoes, broccoli carrots etc are fine but it is hard to take loose pistachio nuts to the checkout ! I need some ideas here. Do you sew your own little bags for smaller fruit and veg/nuts etc? I often buy loose almonds, pistachios, beans etc and would appreciate some feedback.

* buy meat from a butcher, not a supermarket. Done. Luckily we have a great butcher in the little town I live in.

* stop buying individually wrapped or bagged groceries, like snack foods. Done.

* watch the unit price. - always do this using a price book. ( although once you have done your price book you will find that you just know your prices )

* look for and support products that have minimal wrapping. This has not been easy. Sometimes you are limited by where you live as to how easy it is to access particular products. Not eating preservatives does make this a little easier, in that it minimises your packaged foods anyway.

I am looking forward to the next challenge. I hope to maintain many of these principles.


Aussies Living Simply Challenge - Part One

" This week's challenge is to reduce the amount you spend on food, and as an added bonus, the amount of packaging on the food you buy. Our associated challenge this week is to reduce the amount of debt you have."

Our normal grocery budget is $180. We never spend this much, but I always allocate that amount. We then put the left over money into a jar and use it for times when we need extras, for example if visitors are coming or taking it on holidays so we can eat out etc. We usually spend between $120 and $150 per week.

When I redid our budget a couple of weeks ago I cut the amount to $150. I shop with cash and I menu plan before hand so I know exactly what I need and what we are eating throughout the week. Not eating preservatives and cooking from scratch has made a HUGE difference to our grocery bill. Last week I spent $68. This included meat and fruit and veg. I was amazed.

Anyway, as far as the ALS challenge goes - these are the things that I will attempt to do, or in some instances are already doing:

* grow some of your own food.

* make up a food budget and take only that amount of money to the supermarket with you.

* create a menu plan for the week so you know what you need to buy for each meal.

* start tracking your spending. Every time you go out, take a small notebook with you. Write down every item you buy and how much you spend. This will give you a good idea of where your money is going. When you do this for a few weeks, you'll see your money spending pattern emerge. Once you've identified your weak spots, you can start fixing them.

* start a grocery stockpile.

* cook from scratch. Processed and precooked foods cost much more than basic ingredients. Don't pay someone else to cook for you, do it yourself and save.

* include at least two meatless meals a week.

* ban yourself from eating out or buying takeaway for this entire week.

* shop for specials. Go to a few different supermarkets in your local area to cherry pick their specials, and then finish your shopping at your regular store.

* buy vegetables and fruit from roadside stalls and farmers markets.

* ask around your neighbourhood to see if there are any local people selling food. You may have a neighbour selling eggs, honey or organic vegetables.

* make your own shopping bags and fruit and veg bags so you're not bringing home plastic bags.

* buy meat from a butcher, not a supermarket. You'll find it's probably cheaper and fresher, and have less packaging. Ask the butcher to wrap your meat in paper. No plastic sheets or bags.

* stop buying individually wrapped or bagged groceries, like snack foods.

* buy larger packs and decant into smaller jars.

* watch the unit price. Check out the price per gram or piece. Just because it's packaged in a certain way, doesn't mean it's cheaper!

* look for and support products that have minimal wrapping.


Simple Savings Newsletter

There are lots of budgeting websites but most of the content is American.

This website is the best one to use for saving tips. The ideas are sensible and the savings are real. I particularly like the wealthy habits calendar. It brings lifestyle back into balance.

Check it Out:

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