Budgeting – Fixed and Variable Spending

Budget is not a comforting word for some families.  Some might feel trapped or stressed or even afraid of that word.  Maybe it’s been a while since you took a serious look at your finances. Maybe you have tried to create a budget and stick to it many times in the past, and maybe you failed many times too! Discouragement may have settled in a long time ago.

I’ve been there, I’m still there sometimes. Living in a budget can be challenging, but it is definitely worth it. The hard part is to keep trying – believe me, I get that. And unless frugality is a lifestyle for you, building a budget is key to the financial success of your family.

The first step to creating a budget is tracking and listing your spending. You will have fixed spending and variable spending items in your budget.

Fixed spending includes expenses don’t change much from month to month. These are things like mortgage, phone, insurance, etc.

Variable spending includes expenses that are never quite the same twice – thing like food, gas, clothing,  entertainment, etc.

When I was first becoming aware of the need for a budget in our household, I was over at a friend’s house and she was asking her husband if he had put all his receipts in “the bag”. I questioned her about the mystery bag, and discovered that they kept all their receipts whenever they purchased an item, and threw them into a plastic bag in the cupboard every few days. My friend would take all the receipts and reconcile her bank statements and credit card statements with the receipts.

Well, that sure sounded like a lot of work to me, but it stuck with me, and I remembered her method when it came time to track our spending habits. I actually came to appreciate how I could see exactly where our dollars where going, and over time it became less time consuming and more educating to Josh and I.

Only I used an envelope stuck with a heavy-duty magnet to the side of my fridge. It has been there for years now, collecting our receipts. Josh has adapted in amazing ways to this system through the years. When it’s time for me to look at our finances, I grab the envelope and away I go.

So… let’s start tracking fixed and variable spending, shall we?

Here is a handy-dandy Family Budget Planner that I will share with you during our time together, as we create a budget for your household. I’ll unveil a little bit at a time, until we have a master budget document at the end of a few weeks. For now, I’ve listed some of the more common fixed and variable spending items you might encounter as you track your expenses. Fill in the totals under the 1st of 15th of the month if you have pre-authorized transactions, if not list them wherever you like for now. We’re just trying to get an idea of what is coming out of your bank account and where it is going. You might learn a lot about your spending habits!

FBP - FV spending

Some of your receipts might need to be broken down into different totals because you’ve bought food items and presents and hygiene items all at the same store.  Tracking receipts gets easier with practice!

Next time we’ll chat about income – what’s COMING IN to the bank account. And then we’ll start to line it up with the expenses – what is going out. Once the dust settles from that whirlwind of tracking and listing, we’ll figure out what to do with any deficits or surpluses that we find!

For now, I’ll leave you with a challenge to help the budget…

Pick one of your fixed expenses (for example – car insurance) and see how much you can lower it by shopping around a little. Get a few quotes, and stand back in awe of what you find – the price difference from one insurance place to another can be really surprising!

Josh saved us $700 per year in one afternoon a few years ago. He took our car insurance contract to a few local insurance companies and gathered quotes.  We picked the one with the same coverage but lower payments – $700 per year lower!



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