Budget Example

• One Day at a Time
  
  The 2007 United States Census tells us the median American household contained three people, earning $50,000 before taxes. After withholding, let's say your family's take-home pay is $3000 per month and your monthly expenses are: housing, $1200; groceries, $500; transportation, $300; living expenses, $250; utilities, $250; health care, $200; recreation, $100, life insurance, $75; savings, $75; clothing, $50.
  
  Some of these expenses are either fixed amounts or need to remain untouchable, including housing, transportation, utilities, health, life insurance and savings. The remaining monthly expenses, which can be managed daily, should be divided by the number of days in the month to arrive at the daily total. Assuming a 31-day month, the daily budget in this example works out to: groceries $16.13; living expenses $8.06; recreation $3.33; lothing $1.61. Everyone's priorities are different, and your breakdown may vary.
  
  Countless supermarket and restaurant ads imply that $5 for one single meal is a great price. The question to ask, however, is how that price fits into your budget, and for our "median" family, it does not. If your challenge is to feed a family of three on $16.13 per day (three meals daily multiplied by three people), your target price per meal price is $1.79.
  
  So what does a $1.79 meal look like? A family meal might consist of: one pound of chicken leg quarters, $1; three ears of corn on the cob, $1.50; half a bag of coleslaw mixed with a homemade dressing, $.99; one can of baked beans, $1.50; three glasses of milk (eight ounces each), $.38. The grand total is $5.37 for a family meal, or $1.79 each.
  
  Living expenses are made up of all those little things that do not fit neatly into other basic categories and vary from one individual to another. Examples include pet care, haircuts, cleaning supplies, toiletries, hardware items, gardening supplies, hobbies, household items, sporting equipment and manicures.
  
  

Tactics

• Cash
  
  Some withdraw cash each week to pay for daily expenses out of pocket. Others set up an envelope for each expense category and fund it weekly. The advantage of these methods is having a clear visual reminder of how much cash is available at any given time. Others use debit cards and track balances carefully. Still others use credit cards for these expenses and pay them in full each month. Those who can do this successfully enhance their credit ratings. For others this is an easy way to slide into debt.