Part 1 of the series
Perhaps the biggest money saving tool in my arsenal is to have a budget. A budget helps you to stay on track with spending based on how much money you have coming in. While having a budget isn't really fun, it does help keep you out of debt.
Disclaimer--I'm not a financial expert. The suggestions here on setting up a budget are gleaned from our family's experiences.
Steps of setting up a budget
1. Start tracking what you are spending now. For one month, write down everything you spend money on. This can be done with one of the many computer programs available, you can create your own Excel file, can purchase a budget book available at many office supply stores, or you can do it the old fashioned way with pen and paper. Don't drive your self crazy with tons of detail. Recording "Kroger $45.67 groceries 5/3/09" can be enough information.
2. After that month, look at your spending. Sit down with all family members and decide what areas are financial leaks. Set goals for the upcoming months on where you want to see your spending. Perhaps your entertainment expenses for one month were over $100, and this month you want to move them down to $50 or under. When discussing these issues with family members, also look at how paying down debt can play into your budget work.
You may decide that you only want or need to keep track of certain areas of your budget. If some parts of your budget are relatively stable, you may decide to focus more on areas where you tend to overspend. As with any of the tips or tools you find here, do what works for you and your family. There isn't a right or wrong way to do it.
3. The envelope system is helpful for many people. If you have $40 budgeted each week for grocery expenses, place that money in an envelope. When shopping, use that money. When it runs out, you are done. If you have extra from one week, add it to the next week. While the envelope system doesn't work for every part of your budget, it tends to be helpful for expenses such as groceries, clothing, and entertainment.
4. If you are already budgeting, start recording the amount you save with purchases. This adds a little element of fun to the budget. Know when to step away from a "deal" though. A good deal isn't one that will end up in the trash, isn't one that will make you go over budget, and isn't one that you will later feel guilty about.