down to earth

WRITING UP YOUR BUDGET
A budget is really a spending plan. Having a budget does not restrict you but instead it gives a feeling of freedom and relief. When you spend according to your budget, YOU make the decisions on where your money will go, YOU decide how much will be spent and YOU decide how much you will save.

I resisted having a budget for years because I thought it would be a restriction and I refused to be restricted in any way. Now I know having a budget gives you a kind of freedom that not having a budget doesn't come close to. Before my budgeting days I used to feel a mild guilt and unease when I spent money, now I know that what I spend has already been allocated for spending and I have no worries when I come to buying what I want. Having a budget is not being tight either. You will still enjoy your life, probably more so, but you'll do it within the controls that you have set for yourself. Having a budget doesn't mean you'll never spend. It means that you'll identify your needs and what you really want, and save money in areas that don't matter so you have money for things that do matter.

(Please note, these downloads are no longer available.)
I have two pdfs for you to download in my downloads section on the right side of your screen - Sample Budget and My Spending Plan. One is a sample budget, the other is a blank form, based on the sample budget, that you can use to write up your own spending plan. In the sample budget, you can see the proposed spending in the left column, in the right column is the actual money spent. As you can see in this budget, it was $82 under budget. That is $82 that was allocated but not spent. This money would go straight towards your debts. You would pay your normal monthly or fortnightly payment and add $82 extra to it. If you are debt-free, you would put this money toward something you're saving for - Christmas, a holiday, a new computer, aquaponics tank, whatever.

You have two types of spending - fixed bills and cash spending:
FIXED BILLS
In MY SPENDING PLAN, you can write up your own budget. The figures at the top are all your fixed bills. Get out some old bills and calculate how much you pay for all your services, insurances, registrations, rent, rates etc over the course of a year, then divide by 12 to get your monthly amount. As you can see in the sample budget, my fixed bills come to $765 per month. That amount is transferred into a special bill paying account every month and is not touched. When each bill comes in, it is paid for out of this account, preferably by direct debit.

CASH SPENDING
Under the fixed bills section, there is the cash spending. This amounts to $655 in my budget. I withdraw $655 from the bank every month. I have a set of ziplock bags on which I've written the amount and the category. For instance - IGA/Aldi and I put $250 in that bag. When I go grocery shopping, I take some of that money, do the shopping and if there's anything left over, put it back in the bag when I come home. I do that for every category I've written - Groceries, Transport, Health, General. You decide what your categories are and you decide how much goes in each one. Just try to make it the least amount possible without getting yourself into trouble. At the end of the month, the left over money - $82 this month, goes to pay off debt or to what is being saved for.

PLEASE NOTE: A month, or monthly plan, actually means every four weeks. Mark this on your calendar because it's important that you transfer your amounts to your bill paying account and withdraw your month's cash every four weeks, not every month.

So how do we achieve this highly esteemed state of being financially sound and debt-free? Stop spending. That is the most important first step. When you’ve done that, when you have really decided that now is the time that you’ll grab hold of your life and direct it towards the path you want to take, then it is time to make a plan.

THE PLAN
You need to plan for the best future you can imagine for yourself, but prepare for the worst. Your priorities now are to:

stop spending on non-essentials. The only thing you should continue to do is to make your loan repayments and pay for food and transport costs;
establish an honest record of your spending habits;
calculate how much debt you have and how much that debt is costing you each year;
work out how much you really earn. That means work out how much money you actually get in your hand each week, minus your work-related expenses. This is the real amount of money you have to live on and to pay bills;
save for an emergency fund to act as a buffer between you and hard times;
prepare a budget. If you already have a budget, prepare a new one with your frugal life in mind;
pay your debts as quickly as you can.
shop in a thoughtful and sustainable way;
stockpile food and provisions;
start to produce some of your own food;
work out a plan to conserve water, electricity, petrol and gas. Stop making unnecessary phone calls.

So how do you do it?
Generally there are a few ways to cut back.

Ask yourself if you really need it.
Ask yourself how your life will be better with this product in it.
Separate your wants from your needs and be firm with this.
If you do need it, can you barter something for it instead of spending money. Bartering used to be quite a common way of obtaining goods in small communities. Ask around, you’ll probably find people who are keen to barter.
If you can’t do without it, can’t barter for it, can you make it yourself? One of the skills you’ll develop in your simple life will be to hand-make many things from food to clothes.
Above all else you need to cut back on what you’re spending. This will give you the money to create more choices for yourself by reducing your debt, and in the end it gives you freedom to live the life you want.

CHANGE JAR & EMERGENCY FUND
If you're on a low income or trying to get out of debt, it's a good idea to try to create a buffer between you and an emergency. For instance, our dogs were sick last year and the vet bill was $800, we paid it from our emergency fund.

Get yourself an old jar or tin and empty your purse or pockets when you come home. If you have change left over from groceries etc. that change goes back into your marked ziplocks, Whatever spare change you have, put it in the jar. NEVER TAKE FROM THE CHANGE JAR. Don't think of it as extra money, it's money that has a purpose in your life and you need to keep it for your emergency fund. Put every spare cent you have in your change jar.When the jar is full, deposit it into your bank account. Try to build your emergency fund to at least $500. It will help you when something unexpected happens and having it will help you feel less stressed about living on less. You will know you have that emergency money, just in case.

So this is where you actually start doing something. This is an extremely important step on your road to budgeting, don't skip it.

TRACKING WHAT YOU SPEND
Most people know how much money they earn each week but few know how much they spend. You must have a realistic understanding of where you money goes to be able to budget and stick to it. If you want to know how to stop your money disappearing, you need to know exactly where the problem starts. You can’t stop leaks unless you know where the leak is coming from.

Get yourself a small notebook and write down everything you spend. That means everything you spend, every day. This might include mortgage payments, groceries, newspapers, chewing gum, lunches, Lotto tickets, your kids’ pocket money, coffee, petrol, your pocket money, travel, birthday gifts, an apple, bottles of water and Coke. Every time you spend something you must record it, no matter how trivial it might be. Take the book with you every time you go out, even if you’re not going shopping. You might stop for petrol, a newspaper or buy a bargain bag of tomatoes at a road side stall. Write down your purchase right after you spend.

Often when we spend on small items we don’t notice how much it adds up to over a longer period of time. For instance, if you’re buying a cup of coffee on the way to work that costs about three dollars for each cup, you’re spending fifteen dollars a week and around seven hundred dollars a year. If you’re in the same job for five years and you buy that cup of coffee every morning, you’ll spend $3,500 on coffee over that five year period. That’s for just a cup of coffee. The same logic applies to buying the newspaper everyday. Our local state newspaper costs one dollar during the week now. If you buy that on your way to work each day, you’ll spend about $1,125 over five years just to have something to read on the train or in your lunch break. A bit of organisation would allow you to have your coffee and reading material for a fraction of that price. You will only know that, however, if you track what you spend and see for yourself.

Attach a paper clip to the cover of your notebook and when you go grocery shopping, attach your dockets to the book with the clip. Dockets are aids to help you map your current spending habits. When you go home, record everything you spent on your shopping trip. Above all else, be honest with yourself. Make sure you record every cent. You are the only person who will see your spending record so if you cheat, you cheat yourself. Write everything down and at the end of the week, make your total. You’ll be surprised how those small amounts add up when you calculate it all. This record of your spending will be a valuable resource when you’re doing up your budget.

Thrift is the glue that holds simple living together. It allows you to live well on a lower income and it will help you to get out of debt and stay debt-free. Many people come to the fork in the road that directs towards simple living or continued consumerism when they are deeply in debt. We have filled our world with products and dug ourselves deeper into debt to get them. Why? Why would you want to work your entire life to pay for “stuff”.

Every dollar you spend has a certain amount of greenhouse gases attached to it. Generally what you buy has been produced and delivered to your waiting hands, using fossil fuels. Not spending saves not only your money but also the environment we all live in.

Every dollar you don’t spend and every person you encourage to live simply allows the planet to recover just a tiny bit more. It will take huge changes in spending patterns and attitude to heal the damage done, but true change starts in your own backyard. Never let anyone tell you otherwise. Thrift plays a part in almost everything you’ll do in your simple life. You need to use less of almost everything you have. You’ll be thrifty with your money, the way you buy your groceries and how you use them. There are many ways to be thrifty with clothes and shoes. Shopping at thrift shops and making your own are two important strategies. You’ll develop ways to pay off your mortgage early or save for a deposit for a home – all by being thrifty. You’ll be thrifty with your consumption of electricity, petrol, gas and telephone calls.

We all know that money doesn’t buy happiness. A quick look at the newspapers will reveal the miserable lives many wealthy people live. Of course, happiness doesn’t automatically come with a low income either. That will take a change of attitude. It takes a commitment to your future and to your quality of life to make it happen. When you’re content with what you have, be that a lot or a little, and when you see that your future is full of possibilities, then happiness will not be not far away.

Contentment is not dependent on how much money you have, in part, it flows from the way you view money and how you deal with it, but it’s more to do with how well you use what you have. When you’ve got all your simple systems set up, you’ll feel in control of your life and what happens to you. If it’s the first time you’ve felt that control, it will be very liberating.

Our consumer culture has taken away our ability to provide for our own needs. It’s lured us in with promises of an easy life where everything you need is made for you. Let’s take back our power to make the things we need. What you make yourself will be better quality, healthier, safer and more suited to you and your family than almost anything you can buy at the store. When you start making your own things you’ll wonder why it took you so long to start.