I have identified a few problem areas or areas of opportunity in our monthly budget. These categories are the most variable and the most controllable out of everything (controllable as in they are not fixed expenses like utilities). For us, these categories are Groceries, Eating Out, Entertainment, and Household. Groceries is exactly that, only groceries. Eating Out is any restaurant, vending machine, or any other way to spend money on food that isn’t at the grocery store. Entertainment includes any sort of fun or recreation expense, such as video games, music, or going to an NFL game. Household is a broad category and includes anything we need around the house, such as paper towels, cat food, soap, etc… you get the idea.

The reason I chose to focus on these categories is that they are not strictly needs, but mostly wants and therefore not necessary to live on. Household and Groceries are part needs, part wants, while Eating Out and Entertainment are purely wants. I have found some large variation in these categories now that we are watching our spending closely and that leads me to believe there is room for savings.

Groceries- we spent $628 in August, $195 in September, and $460 in October. That is an average of $428 per month, but that still sounds like a lot for two people. The fact that we were under $200 once makes me think we can save a lot of money here and I have budgeted $300 for November as a place to start.

Eating Out- we spent $191 in August, $114 in September, and $230 in October. That is an average of $178 per month. Again, the fact that we ‘survived’ September while only spending $114 on eating out makes me think we really don’t need to spend the $230 we did on October. I have budgeted $150 for November, which should be a nice medium.

Household-  more of the same pattern, $387 in August, $203 in September, and $279 in October. That is an average of $290 per month. All of those totals look high to me, but since the best we have done is $203, I am budgeting $225 in November and hoping we can come in below that.

Entertainment- would be more consistent, except for the unusual expense of going to a football game in September: $69 in August, $241 in September, and $40 in October. That is an average of $117 per month. I am going to budget $120 for November because I have a planned entertainment expense.

If I stick to my November budget of $795 for these four categories, I will save $218 over our previous average spending and I will save as much as $691 if you take the high spending month from each category. That is serious savings! On the other hand, if we take the low spending total for each month ($552), I may actually be spending $243 too much. That is a lot of spending!

My conclusion is that this is a difficult part of the budget to handle. These categories all come down to needs versus wants and how much money do we want to spend today to satisfy those needs and wants versus what we are giving up in the future to do so. I haven’t found the ideal solution yet, but I think that taking the time to review and looking for ways to cut spending is what it takes for success and on top of that it probably just takes some time and practice.

By , Tue 6 Nov 2007, 5 Comments, Categories: Saving, Spending