|
|
Frugal
Living Thrift
Saving Money Penny Pinching
Home
Frugal Living Tips and Frugal
Living Articles for
Frugal Happy Families
|
Search Frugal and Simple Living Sites by Keyword
Below
|
|
Budget Creep
by Gary Foreman
Read an interesting story the other day in Charisma. It was about a man who
needed to cut a lot of 2x4s to a 6' length. He wasn't an experienced carpenter,
but figured that anyone should be able to cut a straight line.
So he pulled out his tape measure and marked the 6' spot. Drew his line across
the 2x4 and cut it. Good job! Then he took the 2nd board and put it on the saw
horses. Instead of using the tape measure he figured he'd simplify things by
just using the first 6 footer as a guide. So he put it on top of the second 2x4
and marked it. Another straight cut completed!
Figuring that he had it down pat he took the 2nd board and used it to mark the
3rd. And on it went until he had them all cut. But then something interesting
happened. He noticed that the last board was a few inches longer than the first
board. Baffled as to how that could happen he called a friend who was into
woodworking. Turns out that each board was longer by the width of the pencil
mark he was cutting on. Added all together it totaled a few inches!
What does that have to do with our finances? I've noticed that something similar
can happen to our family budget. Seems like many of our expenditures rise just a
little bit each year. Some of it's understandable. For instance most of us are
spending more on groceries this year no matter how careful we are. But some
things just creep up a little bit at a time. Compared to last year it doesn't
seem significant. But if we compare it to 5 or 10 years ago, that's a different
story. Our expenses are a couple of inches too long!
One way to counteract that is to use a tool that's sometimes employed in
business. It's commonly called "zero based" budgeting. In a zero based budget
each category doesn't start with last year's amount. Each one starts at zero. So
every dollar you spend needs to be justified. There's no assumption that what
you spent last year was the right amount. Everything is on the table. In most
categories you'll find that last year's budgeted amount was fine. But you might
find an area or two where you have opportunities to save that you weren't aware
of.
It's a good idea to do a zero based budget every 4 or 5 years. Or any time that
you find yourself in financial peril. Who knows? You might find a long 2x4 in
the process!
Keep on Stretching those Dollars!
Gary
Gary Foreman is the editor of The Dollar Stretcher.com website and newsletters. This article originally appeared here. Click here for information on budgeting success.
|
Home
|
|
