Frugaldom is set in rural southwest Scotland, so the budget we set here is not always suitable for everyone, but it's readily adaptable to suit all budgets. For example, we don't have superfast broadband, we don't live on a bus route and we don't live within easy walking distance of any shops, banks or post offices. The bins are over a mile from the house, so recycling and a zero-waste attitude towards most things is very helpful.
If you have a basic knowledge of spreadsheets, you are welcome to download a copy of my simplified budget HERE. It excludes the cost of keeping the garden and livestock, as these things must be self-funding in order for them to become part of our self-sufficiency challenge and part of the homebased business.
I work with the free programmes available to download at http://www.openoffice.org/ but the spreadsheet has been saved into an Excel document for ease of use. Open Office allows for many different formats, so it's a very frugal office suite.
How to get started.
Join us in the Frugaldom challenge forum so you can keep in contact and compare notes wth others with similar aspirations. We're all in it to cut costs, kill debt, increase savings and simplify life. The 2011 set of challenges also incorporates setting up homebased cottage-style industries, so there will be plenty of information available - good, bad and downright ugly. The good life isn't all good, it gets messy and it gets complicated but we can all work though the problems together.
You need to calculate your entire annual income then deduct all unavoidable/neccesary bills and debt payments etc to reach your actual budget amount that is left for running the household/living.
If you work, any costs relating to having that job (transport, lunches, childcare, work clothing etc) are classed as unavoidable costs. These items are essential in order for you to do that job and are nothing to do with the cost of living. Deduct all of these from your annual income.
Once you have a figure that's left over for all payments you have control of, then you work back through a prioritised list, starting with necessary things like power, heating, water, household bills, food etc. In my opinion, getting those priorities right is key to the success of coming in within your budget while keeping up with necessary bills. If there's anything left over, use it to kill off any debt starting with the one that costs you the most by way of interest or other charges. If you have small debts, I prefer to kill these off first so it's fewer payments going out the bank.
My personal budget is £4,000 so I prioritise it from most important needs to basic, non-essential wants.
Rent (or mortgage), council tax and water payments are non-negotiable, so these are the first things deducted from the annual total.
Any debt payments that need to be made on a regular basis - loans, HP, contracts.
The cost of your job (if relevant) as per above.
Regular, essential prescription medications.
Any other regular, unavoidable payments
Once you have deducted all of these things, you should arrive at your annual housekeeping budget.
Always Prioritise: Needs, not wants.
Food - basic staple diet, zero rated VAT
Oil/Gas/Coal/Logs (where applicable)
Home insurance (where applicable)
Essential travel - bus, taxi, car share etc
Foods & drink incurring VAT @ 17.5% (20% after Jan 2011)
Television (basic Freeview)
Non-essential travel - bus, taxi, car share etc
Subscriptions (TV, newspapers, magazines, films)
Beauty & Health related
Private pension plans
Shares in racehorses
Off the peg designer wear
Latest electronic gadgets
etc., etc., etc...
Designer fashion - direct from the London, Paris, New York, Milan catwalks
Executive class cars
You get the picture...
Group 1 relates to things we couldn't or shouldn't live without, although we are still in control of how much we spend on each.
Group 2 comprises of quite basic items but, to someone having to really cut down to help avoid bankruptcy or at risk of losing the roof over their head, these things can be classed as non-essentials. We can survive without them.
Group 3 is made up of examples of things that are extras to running a frugal household - luxuries that many cannot afford but we tend to indulge in a few of them when the cash is available. But we need to always keep in mind the consequences of spending on these things at the expense of clearing debts or adding to our savings.
Group 4 is just a few ideas for once you're completely debt free and have accrued enough savings to enjoy some decadent living. Where Group 2 may read 'George' brand from Asda, Group 4 would read something like Chanel, Gucci or Prada etc.
Anyway, you all get the picture. These are examples of how I would prioritise sample lists, but I'm not suggesting everyone differentiates in the same way I do. By my way of thinking, Group 3 items should never feature in any budget where there are arrears on any form of debt. Household pets is a very tricky one for many. Obviously, if the pets are already there and you can't bear to part with them, allowances need to be made and all animal-related costs incorporated into the budget, but it will probably be at the expense of something else. Gift buying is another tricky one but a true frugaler would be able to make something of some description, even if it was just some baking, homemade preserves or handcrafted items. We shouldn't really need a budget for gifts but we all like to give them, so best be aware of what you're prepared to spend without it affecting how much you can afford on Group 2 items. Worse still, it should never affect the ability to pay Group 1 items.
Please let me know if you think I have prioritised anything into the wrong category or if I've missed out any necessary basics. Also, please remember that this is just my personal thoughts on the matter. Your priorities may be different from mine.