Why is it Necessary to Budget? Download your FREE Spreadsheet.

Having a budget or living with a budget does not have to be as scary as it sounds. Neither does it mean taking the cheaper option, having to make do with lower quality things. It only means knowing how much money you have available to spend and this can only be a good thing.

A budget can be for a day if you are out for the day and have a certain amount of cash to spend. It can be for a week, or however long you want to make it.

The best thing about a long term budget is that you are not only in control of how much money you have now, but you are able to forecast how much money you will have in a year's time, or five year's time or longer, assuming that things stay the same.

The magic of this is that it allows you to see exactly what goes where. You can see where the little wormholes which suck up the cash for no reason and you can see work out your minimum monthly amount. That is what is the absolute minimum income you need to have to keep everything ticking along.

Then with the rest of the income, you are free to spend it however you like. You can pay off debts, you can save up to buy that special thing you have always wanted or go on that holiday of a lifetime.

Having a budget can actually free you to do more with your income.

And it is much better than living in the dark, not knowing how much money comes in, how much goes out.

I have put together an excel spreadsheet which can let someone manage their monthly budget over a year.
It is available as a FREE DOWNLOAD for anyone who wants to use it.

It can be downloaded from this page.

If you find it useful then please feel free to click one of the adverts on the right of this page.

There is a Microsoft Word document which explains how to use it.

To use it you will need to have Microsoft Excel.

How to Survive on a Budget

The first step is to work out what your weekly or monthly budget is.
This could be your pocket money, or your monthly allowance or your income.

Many people these days use online banking. If you do, download the last statement for the last complete month and open it up as a spreadsheet. If you do not have online banking, and your bank sends you monthly statements, then enter it into a spreadsheet. For pocket money or allowances, enter the amount that you regularly receive.

Now sort the spreadsheet into types of transaction. This will separate your income from your regular outgoings and your extra expenditure. From this spreadsheet, it is now clearly easy to where the money goes every month.

As Mr. Micawber famously said

"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery"

From which you can see, if you spend more than you earn, then you will be miserable!
So, now you know how much of your income goes out on things that you can not avoid, like rent/mortgage, travel, utility bills, kids etc. And after this, whatever is left is your budget for the month. I hope there is something left.

Look carefully through the monthly expenses. Are there any items that can be easily reduced? Do you pay too much for insurance? Can you cut down on any other bills by switching to another company? The moneysavingexpert website is very good for searching for money saving deals.

If you have been following my budget food posts, then hopefully you can make some savings with the week's food budget to opt for cheaper alternatives, or to cut down on waste.

Once you have made as many savings as possible, then work out an amount of money which you can safely spend over the month.

For food expenses, to live within a budget the key is to plan. You can not plan every single meal or allow for emergencies and unexpected invitations, but in general, you know that you will have three meals a day and these can be planned in advance. This way you can decide how much you will spend on your food budget for the month.

A good way to live on a budget is to leave all debit and credit cards at home. Because we are survivors, we do not cut up our cards or anything so drastic, but we stay prepared for all emergencies. If we only carry the exact money in our bags or pockets that we need to spend, then it will be much harder to overspend. It really feels like spending if you have to hand over the actual money instead of just giving your card. For some reason, the card seems to be detached from you and your bank account. So even people with not very much money happily hand over cards to buy things they do not need. But if you really have to give someone £58 in cash, then you actually feel it!

So, cut down where you can.
Work out how much you can reasonably spend per week or day and carry that amount with you.
It is very easy to get out of the spending habit if you have to use cash.

Next Post: Why should we budget? Download your free spreadsheet

Budget Food: Scrambled Egg on Toast

Carrying on my budget food theme, a quick and easy breakfast to make is scrambled egg on toast.

For one person:

1 egg             13p            My eggs are free range because I refuse to support caged hens. So they are 13p an egg.
Splash of milk if you like.    5p
Seasoning.          1p
1 slice of toast      5p
Knob of butter for the toast and to cook the egg.         10p

Toast the toast.
Whisk up the egg in a bowl and add seasoning and a splash of milk. This makes it much lighter. Leave out the milk if you are a purist. Cook in a frying pan and turn out on to the buttered toast.

Total cost of the breakfast: 34p

Budget Food: Tortilla - Spanish Omelette

Ingredients:
1       medium onion          6.5p
1       medium potatoes     10p
3       eggs                        39p
1       knob of butter           20p
seasoning to taste

Preparation:
Finely chop a medium onion and gently fry it in a frying pan. We want it to soften and not go brown.
Peel two small or one medium potato and slice it as thinly as possible. Add this to the onion in the pan and cook both of them gently until soft. Depending on the potato, this should take between 10-20 minutes. If the potato is not cooking, then add a splash of water and simmer with a cover until done.

In a bowl, break three eggs and beat together. Add seasoning to taste.

When the onions and potatoes are done, and slightly cool, transfer them to the egg and mix.

Wipe the pan and add some butter or oil. Add the whole egg, onion and potato mixture and cook gently for around 20 minutes. Turn the mixture over and cook on both sides until the egg is completely cooked.

Total cost 75.5p

Budget Food: Chewy Cookies

The first budget food recipe I have researched is those big fat chewy cookies which you can buy in supermarkets and from stalls. These can cost up to £1 each in some places, so I was wondering how much it costs to make them. The prices are from Aldi and are correct on the 10th of February 2012.


This is the recipe:
250g    self raising flour                     9p
125g    butter                                 59.5p
200g    sugar                                  47.5p
1         egg                                     13p

plus anything else you like such as chocolate chips, raisins, dried fruit, etc.

Preparation:
Preheat the oven to Gas mark 3/170 degrees C. Grease a baking sheet lightly.
Melt the butter and add the sugar. Stir until it is well mixed and begins to be a little lighter in colour. Wait until it is cool then add the egg and mix again until it is creamy and light. It does not look like cake mixture, just a little lighter. Then mix in all the flour until it is a smooth consistency.

Drop largeish amounts of the mixture onto the baking sheet with a tablespoon taking care to keep them around 5-6cm apart because they will spread out in the oven.

Bake for 15 minutes. The chewy, soft consistency comes from underbaking them slightly. They will be large, flat slightly sticky cookies when they come out, but when cool, they are fine.

Using this recipe, I made 17 medium sized cookies for £1.29.

That is 7.6p per cookie.
(Include energy costs if you can work them out for the length of time that the oven is switched on).

You know that these cost around 10p a cookie, after energy costs. So make up a batch and go out and sell them for 50p each. 

Budget Food

These times are very hard for a lot of people. Someone who is living on benefits must survive on around £60 a week. So, in this series on budget food, I have decided to see how to live on less.

All my prices are based on shopping at Aldi, which is the cheapest supermarket in this area. Once in a while I will also do a comparison with other supermarket prices.

The objective is to make more things at home, rather than buying things which have been ready made, like pre cooked meals, and just to see whether it is possible to have a happy variety of foods and how much they cost us to eat.

I don't plan to preach about healthy eating or what you should or should not be giving to children. There are a lot of other websites like that around. We all live in the real world and do the best we can. We all eat chocolate and cake and unhealthy snacks from time to time because we enjoy them. This is meant to be purely an exercise in the cost of the food.