Thursday, January 28, 2010

Family Budget 2010


Why do we make a budget? One of the main reasons for making a budget is to give us a chance to save little by little so that we can be free to make purchases and pay for things that we need or want.

One of the things we try to do is to reduce spending, finding places that we are overspending and correcting it. A few areas we need to improve for 2010. After looking at our spending habits using Mint.com. We have been able to see what areas we've been slacking in.

So in 2009 we spent $21k for rent/mortgage, gave nearly $9k away, ate nearly $7k worth of food (which includes eating out), spent over $4k on automobile, gas, insurance, $4k in utilities, and $2k in misc shopping, $900 for education expense, and another $900 for other stuff.

So if we average that out over the year per month. In 2009, we spent the following per month (note these are after tax percentages):
  • $1750 in rent/mortgage (43.8%)
  • $750 in giving, tithe, donations (18.8%)
  • $580 on food (14.5%)
  • $360 in gas, auto insurance, repairs (9%)
  • $360 in utilities (water, gas, internet, phone) (9%)
  • $166 for misc shopping (4.1%)
  • $75 for education (1.9%)
  • $75 for other stuff. (1.9%)
And the rest went into savings/investments. SO... what should we do. In most of our spending has been pretty good. Our food expense could be reduced by $150 per month, our gas/auto can be reduced by about $160 a month, our misc shopping can be reduced by $100 per month and $75 for other stuff. These four areas if we are more careful can save us about $485 a month or $5820 a year.

An extra $5820 a year is a big deal. With a little bit of care that can go to our savings account, investment account, etc. If we do this consistently every year and make 10% interest... in 30 years these small investments (future value of money) we would have... $1,096,000.

That's right, $1,096,000 in 30 years... that's if we decide to reduce $150 in food, $160 in auto, and $175 in misc and other spending.

That's what a budget can do for you.  What can a budget do for you?

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