Budgeting advice 101: living in the 'new' economy

Making and sticking to a home budget used to be a fairly straightforward proposition. We could normally count on a certain income level and allocate funds to meet our expenses and obligations in a manner that wasn't too difficult to adhere to and stay in the black. Now, our home budgets may change from month to month, as unforeseen events crop up. Our 'Budgeting Advice 101' is designed to more creatively address such fluctuations in the month-to-month situation.

Not too many of us have an emergency fund or savings account of any significance to back us up. Massive economic 'surprises' have been recently sprung on the public in the form of the many 'emergency' bailout plans pushed through by the government with all haste, leaving the burden of paying for it all on we taxpayers. An estimated 6.3 million jobs were lost in 2008 and we're all wondering who's going to be next.

We need to create a new sort of budget plan, one that's minimal in expectations, with a good trimming of all excess expenditures. Here we provide some budgeting advice and tips to help you transition your old budget to a more flexible budgeting process that makes room for the unexpected, while still meeting your obligations.

Our first bit of budgeting advice is to completely revamp your current budget, building in a factor of what might be required to just subsist, should you find yourself laid off or faced with a substantial unexpected expense, such as needing new tires, a hospital deductible or a pricey prescription. A thorough examination of your budget is likely to reveal that many expenses you used to consider necessities might now be categorized as luxuries.

In order to survive, the only real necessities are food, clothing, transportation costs and shelter. Shelter includes not only your rent or mortgage, but associated expenses such as electricity, water, phone and trash removal services. Use these expenses as your starting point. View everything else as a luxury.

Starting from that base, prioritize your luxury expenses. Entertainment, eating out and the occasional weekend getaway should be the first casualties of your old budget. Admittedly, this approach can prove to require adjustments to your lifestyle, but need not seriously affect your quality of life. While at first blush, this may seem like a painful bit of budgeting advice, it's guaranteed to put you on a sounder financial footing, which will help you stay ahead of the curve with each passing month. Much like going on a diet, trimming your budget to the bone can be done in such a way that while saving money, there are alternatives to the fatty content of the budget. Let's see how you might put such a plan in place.

For most of us, a large portion of our entertainment costs involves satellite or cable services. These services run anywhere from $40-$100 a month. Ask yourself is you can live without this luxury for just a few months. The answer is, yes, of course. You can rent movies at the supermarket for just $1 a day. You can play video games online for free. Card and board games used to be popular entertainment back in the day. Sitting on the couch, mesmerized by the tube, isn't doing your health much good anyway. Take walks, ride your bike or go rollerskating in the park. If you cultivate the right attitude, you'll be making positive changes in your life, while increasing your cash flow. It's really not as bad as it sounds! This is sound budgeting advice. The money you now spend on this entertainment expense can be set aside to meet those unexpected expenses.

If you now spend $20 a week on the Friday night pizza, that's $80 a month. Well, I've got to have a little relief from the same-old, you might say. Sure, that's true. Consider that you can make an awesome pizza for about $5. This one bit of budgeting advice for your nouveau budget puts $60 back in your pocket.

Most of us know what to expect when the electric bill comes in each month. Learn to be frugal: turn off lights when you leave the room, empty the lint trap after each dryer use, replace one light bulb each month with the energy-savers, turn off the ATV and computers when not in use and use heat and air conditioning only as needed. You'll be surprised at how that bill drops.

Now we're even hearing about the 'recession garden' a reincarnation of the old time Victory Gardens of the World War II era. Grow some produce and cut the food budget.

Get the whole family involved in this budget trimming effort. With a positive attitude, Dad and the kids may come up with some creative budgeting advice and ideas that get your budget in shape for the times. Just the few pieces of budgeting advice given here can easily net you $500 in just three months!

Budgeting your money with this new mindset can actually be fun! Having an emergency fund can certainly help you be less stressed, sleep better and enjoy a new way of life, even in these troubled times.