Up until a few years ago my husband and I really struggled to keep our finances in order. Every month I would make a budget, but the money on paper never seemed to go as far as the money in my bank account.
My first step in understanding why I was always broke was to list and categorize all of the money we spent each month. I made categories for groceries, gas, fixed bills (telephone, cable, electric, etc.), clothes, household expenses (vacuum bags, light bulbs, etc.), and miscellaneous. Then I wrote each expense down under the corresponding category. What I found amazed me; that month we spent almost $1200 in groceries. How was that possible? The budgeted amount for groceries was $600. Either I wasn’t budgeting enough or our spending was out of control.
I decided our spending was the problem. The first issue was the way we shopped; rather than go to the grocery store one time and stock up, we would go almost every day. Then when we were at the store, we’d end up buying things that were not on our mental “list” (if we’d had a list it might have helped us).
Another problem was where we were shopping. We are busy people with five children who all go in different directions every day. Convenience is crucial to us. The closest place for us to purchase groceries is a convenience store. Unfortunately, when you shop at convenience stores you pay more and buy more.
We had to change our spending right away. So my second step was to make a real list of what we needed before we went to the store.
Then we started shopping at a discount grocery store. It wasn’t close to my house, but it was on my way home from work (convenience!). I still remember my first trip there; my cart was overflowing and I spent $171. It was an amazing feeling. I needed to pick up some items from the regular grocery store, but 90% of my shopping (for two weeks) was done and I was well within my budget.
So some tips for getting on track:
For more help with planning, budgeting, and saving check out American Financial Solutions' free online classes!