I am a single mom and things are very tight. How do I figure out what I should spend on movies, lattes etc. Help! There has got to be a formula. Thanks.
Desperate in Florida
Bummer to hear that things are tight. The MoneyPants community is rooting for you!
It sounds like you're stretching your dollars to meet your NEEDS and trying to figure out what you should budget for your WANTS. The good news is: There isn't any one set formula for budgeting. The bad news is: There isn't any one set formula for budgeting.
One way to budget is to first set aside money for your NEEDS. You'll then know what's left over for things like movies and lattes.
In setting your monthly budget, we agree with the advice most financial experts give: PAY YOURSELF FIRST. That doesn't mean taking yourself out to the movies. Paying yourself first means setting aside money for SAVINGS. As much as you can afford, whether it's $5 a month or $500, put some money from each paycheck into a savings account. You'll be really grateful for it later.
After you've put aside some money for savings, set aside the rest of your money like so:
First for taxes (if it isn't already taken out for you)
Second, to pay down debt, the higher interest amounts first.
Third, for NEEDS (mortgage, utilities, car payment, basic groceries).
Fourth, give a little something to someone less fortunate than you. This could be a phone call, an afternoon, a quarter in someone's cup--you decide.
By the end of this process, you'll know how much you've got left for WANTS like movies, lattes, etcetera.
When you do your budget, don't forget to account for expenses that don't come up every month, like home repairs, emergencies, gifts, school clothes, travel, and so forth.
So what's the bottom line? It's up to you to decide what you want to spend. You might decide that it's worth passing up an extra latte to fatten up your savings balance one month. Another month, you might really need to treat yourself. Only YOU know what you need.
The great news is: You've already started on the road to good money management. Congratulations! Keep track of your spending and you'll soon see whether you're spending on the things that are worth it to you or not.