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 ?

Should We All Be More Frugal ?

Recently I have been thinking more and more about the instability of our lifestyles and the way that we are set up as a modern society to live.

If you tune in to television or magazine advertising they will have you believe that everything is wonderful. It has never been better! 'Live for today', you hear them say....'go ahead, your deserve it'.......'you only live once'....... Pay tomorrow.... interest free...

I look around and see a very different story. I see people wondering why 'everyone else' seems to have it so easy when they are doing it tough. I see people who just completely block their financial circumstances and live from credit card to credit card and keep refinancing their blues away.

I have really started to sit up and take notice because I see more and more people whose lives have been turned around by such a simple event that pulls the rug out from underneath them.

I have seen friends go through a separation and divorce, the death of a spouse who was way too young, a job loss for the only income earner in the family, serious illness which turns a family upside down and people wiped out through once in 150 year floods.

We all subconsciously believe that it will 'never happen to us', but I am sure people who have been through a change like this have thought exactly that.

Do you think it is prudent to tighten our belts in the name of securing a solid emergency fund ? How many of us could truly survive for six months if our current income source dried up ? If your income stopped tomorrow, how prepared would you feel ?

As you know, I am always using 'times gone by' as a reference point when it comes to being frugal, living green or living more simply. Perhaps because of the instability of the times, people from older generations always put money from good times away for times when they may not be as good. They stood by the traditional wisdom of saving for a rainy day.

Are our times today any more stable today than what they were back then ? Does easy credit disguise society's true position ? I am not sure, I can only judge it by what I see, hear and read around the community and in the blogosphere.

Why suspicion is.....yes.

Capturing The Life That Was

Last week I purchased an external hard drive to make a double back up of my digital photo collection. Gee it was easy! I had lots of photos ( I mean LOTS) on CDs all carefully labelled and categorised and I even had proof sheets printed of what was on each disk.

It was so easy to just whip them into iphoto ( I am a Mac girl) and there they all are - in chronological order and able to be sorted in keyword categories at the click of a mouse!

I skim through all the photos they really reveal just how much I have a love affair with days gone by. There are so many photos capturing aspects of a life that was.

I am always intrigued by the lifestyle that people led in the past. The days of hard work and little reward, an instilled work ethic that is rare to come by these days, a complete life of self sacrifice to others with no chance of any recognition.

My Grandmother told me once that the girls of today just don't have the stamina to be able to do all the things they did.....and I would have to agree!

Although, I have been quoted as saying that I could do without electricity and running water, grow my food and still get by quite okay ......as long as I had wi-fi and a solar powered lap top to blog about it! LOL

Look at this tired old truck - can't you see the expression on his face ? Years of hard work can be seen across his brow!

I don't have to walk four miles to school barefoot in the snow. I haven't birthed 13 children all 9 months apart and I will never have to fight for women to get the vote..... but I really do think that there are some traditions and principles that we should not let go of in our modern world.

We should not shy away from hard work. We should only eat our fill. We should show respect to our elders. We should live within our means and we  should raise our children with values that we want to see reflected in our society.

......and then we should blog about it to share the message !

Free Range Kids: Special interview with Lenore Skenazy

Did you catch the 7.30 Report interview with Lenore Skenazy last night ? She is the author of a book titled 'Free-range Kids'. If you missed it, take the time to watch the whole interview with Kerry O'Brien ( who I am secretly in love with and devastated that he is leaving soon!) 

Do you think that it is strange that this topic has become SO CONTROVERSIAL ? 

I congratulate Lenore for being brave enough to take on the topic of 'helicopter parenting' and the issue of 'blame'. I LOVE her position that you can't go to the park and play because it is too dangerous, yet it is okay to let them sit on the lounge and watch television, become obese and develop poor habits and health issues that stay with them for life.

We won't accept caged eggs, but we readily accept caged children ! We fight for free range eggs, but are quite happy to raise 'battery hen' children.

Think back to your own childhood. Were you roaming the streets on your bicycle without a helmet ? Off playing down the street knowing that it would be okay as long as you were home in time for tea ?

Do you remember lots of kids, at some stage, having a broken arm, or skin off from 'stacking' their bike ? Eggs on their heads where they were running around the house and crashed into each other ?

Do you remember when kids were 'dirty' ? They were literally covered in dirt because they were building bike jumps, dig outs, cubby houses or burying treasure maps ?

How does the way you raise your children to compare to your own childhood ?

Think about times back even further. Was my Grandmother hovering over her children to make sure they played nice, didn't get their feelings hurt or (god forbid!) scuff their knee on some grass and get a graze ?

It seems crazy when we compare.

Are you a helicopter parent, a lawnmower parent (the parent that smooths out all obstacles) or a free range parent. I think I am in the middle ground, but with my boys now 9 and 12 I think I can swing a little more free range now that the Lenore has done such a great job of putting language on the issue.

Let's get some dialogue happening, people. Where do you sit on the free range parenting scale ?