Costly Kids: Lessons for Kids

My family lives in a great area with tons of cultural, natural and entertainment opportunities within 20 miles. Many of these activities can be free to low cost if you utilize the free museum days or purchase a year long membership. We could do something every day of the week if we were so inclined and barely scratch the surface. I try to expose my kids to as much as possible. I hope that some of it sticks or sparks an interest or at least raises their awareness of the world around them. There are some things that I would like to expose them to further: music, art, athletics. and dance. My oldest daughter has started pestering me about taking martial arts classes. When money was a little easier to come by, I would have enrolled her in a class as soon as she indicated an interest. In fact, I did do that more than once. She has taken violin, karate (when she was much younger), gymnastics, yoga, art, science, and probably even more.

Now, that money is budgeted more carefully, I'm hesitant to add another monthly expense to our plate especially with her spotty history of staying committed to any particular thing for long. So this time, we've written up a contract. She has her part of the agreement: attend class weekly, put effort into it, and practice at home at least three times per week. I have my part: pay for the lessons and be supportive by taking her to class and paying attentions so that I can help at home. I think it is important for children to develop a proficiency in something to help develop self confidence. We've been down this road quite a few times. I'm hopeful this time that she'll stick with it and give it her best. It is a significant financial investment that we won't be taking lightly this time around. I hope I can impress upon her the importance of that.

Food budgeting

I love food, and I love to cook. Both have gotten me into trouble with my waistline and my budget. Before I became very conscious about spending and budgeting, I was able to spend upwards of 800 or 900 dollars per month on food at the grocery store. That didn't even count money spent eating out. It was just too much.

Just this month, I've spent $211 on groceries. My previous budget was $600 per month for groceries. My plan was to get this down to $500 now that I'm not working. I was hoping to do this through a combination of cooking more from scratch and watching sales and using coupons. I'm still hopeful that I can do this. I've purchased enough turkey and chicken meat to last the month. That means that I have almost $100 per work to cover everything else for the rest of the month.

As I've been thinking about food and budgeting, I'm trying to come to terms with what I can cover in my budget for food realistically. One of my favorite Jane Austen novels is Sense and Sensibility. In the film version, the family, reduced to penury after the father's death and transfer of his estate to the eldest son of his first wife, finds that they can no longer afford such things as sugar or beef. The eldest daughter says, "we must learn to economize". I haven't yet cut sugar out of my budget. But beef is eaten only rarely now in my house. Part of the reason is the health and environmental costs of beef, the other is the price. The cuts of beef that are comparable in price to chicken are far from desirable.

What else will find that it no longer has a place in my shopping cart? I think it would be beneficial to reduce the amount of dairy that we eat. We go through a gallon or two of milk per week, butter is used liberally, and we always have a block of cheddar around. There aren't cheaper substitutes so it would be a matter of cutting these out of our diet or at least reducing how much we use. I'm working on cutting down the number of prepared foods that we eat such as snack foods. I'm also considering baking my own bread. I already bake muffins, cookies and other baked goods.

I'll have to revisit this at the end of the month to see how I do with my grocery budget. If I'm not able to keep it in check, I may have to consider some more drastic cuts to help keep my spending in check.

Budget Holdouts

Everyone has a few of these. A couple of budget categories where you know you spend more than you should or maybe need to spend. There might be any variety of reasons why you do this. You may value whatever you’re spending on highly or believe that you cannot do without it.

For me, the two items that we haven’t cut significantly are our cell phones and our cars.
We’re stuck in our current cell phone contract until this summer. There is no way to reduce it right at this minute. But we’ve also been playing around with the idea (primarily before I decided to quit) of upgrading to smartphones. My husband and I both could use them for our jobs. I’ll no longer have a job soon and thus won’t need one. My husband would still really like one. The difficulty is that the data plans run around $25 on top of our regular plan. We could reduce our plan. We upped our minutes last time but have since found that we’re not using nearly that many minutes anymore. But we also cut our land line. We’re relying on our cell phones now for all of our calls. I’m going to try to reduce our bill from $89 back to $65 if possible after the summer. That is assuming that I can dissuade my husband from the smartphone. Hypothetically we could cut things further: use a prepaid service or maybe go down to one phone. Those are sacrifices that we’re not quite willing to make yet.

The cars. Well, last year our old 1995 Saturn was on its last leg. I was switching from working five days a week to four, which meant that my husband would be picking up our daughters two days a week. The old car wasn’t reliable so we decided to replace it. I did a lot of research and we bought a great late model used Mazda5. We took out an auto loan with a good interest rate. At the time, it seemed quite rational to take out an auto loan on the car. We wanted to get a good dependable car that met our needs. Quitting my job wasn’t on the radar back then. We have a little less than four years left on our auto loan. All together, we spend close to $450 a month to keep my car running and insured. That is no small amount of money by any means on our new budget. The reason that we want to keep two cars is that it would really limit my options for work in the future and limit what I can do with the girls during the week. I’m not attached to our car in particular. We could sell our car and eliminate the monthly payment. We may end up owing a little or might break even. But, we would need to pay cash for a used car. Even paying a couple thousand would be a strain on our savings. We may do this at some point if we determine that we need the monthly cash flow to make it work. We may even go down to one car for a time. We’ll cross that bridge when we come to it.
What are your budget holdouts?

Budget Auditing

I've been fairly disciplined lately about setting up our budget every month. I have a basic budget with categories that occur monthly. I simply change it each month to add in bills/expenses that occur on a less than monthly basis or fluctuate. I then try to estimate our income as best as possible. My husband works varying hours after school and his paycheck adjusts based on that.

While I've been good at setting the budget up, I've probably been half as good at tracking my expenses and hardly ever audit it at the end of the month to see if we stuck to the budget. Since budgeting will soon be vital to my success as a stay-at-home mom (Yikes! I think that is the first time I've used that word.), I need to get into the habit of giving us a month financial check up or post mortem as the case may be.

I think it is important for us for a number of reasons. While we're good at capturing expenses in the big expenditure categories like gas and groceries, those little things like a $1 at redbox seem to fall through the cracks and don't end up recorded in our budget. On a side note, I do everything manually. I keep an excel spreadsheet with three columns for every month. One column is anticipated expenditures, the next is actual expenditures, and the third is remaining expenditures. I leave the first column intact throughout the month. I change the second and third on about a weekly basis to track what we've spent and see what we have left. My primary goal by doing this is to keep our grocery expenses in check and also keep our cash flow situation good. If you have another system, you may need to adjust it so that you're able to do a monthly budget audit. My budget audit is a fairly simple but sometimes lengthy process depending on how well I've kept up the budget spreadsheet.

1) Go through the online bank statement and check register to verify that all of the transactions are accounted for in the budget spreadsheet. (Inevitably there are some cash withdrawals that I can't track to a particular budget category. My husband and I aren't perfect. We don't tend to keep track of very small transactions so we have some cash leakage through the month)

2) Update the actual expenditures category in my spreadsheet.

3) Compare your expected vs. your actual expenditures. There are going to be variations. For instance, my husband had an emergency root canal this month. I didn't budget for it so we have an additional $300 in our medical expenditures than was anticipated.

4) Highlight trouble spots and try to figure out if these are one time unexpected expenditures or if they are a result of overspending.

5) Adjust budget for next month if needed.

I'll be going through my budget audit tomorrow. I'll post the results of my audit as an example.