finance for the homestead · Garden and Farm · Uncategorized

Preparing to Homestead #3: Budgeting & Being Frugal

Every successful homestead understands you must have a budget and a plan! One of the best ways you can prepare your home and homestead, even prior to purchasing your own place, is to create a working budget. As you may already know, budgeting and being frugal really go hand in hand. So how can you Prepare to Homestead by Budgeting and Being Frugal?

Photo by Eneida Nieves on

The best way to answer that is in these simple ten steps. Although some do, very few people are able to just cut everything and work from scratch. By that I mean, desire to. It’s not an easy feat. However, the sooner you start, the easier it is and the quicker and better results appear.

Photo by Pixabay on

Step 1. Find your current expenses

Calculate what you are already spending. Do a general analysis and an in-depth survey. Make a general list of your expenses to get your current expense list, then move on to step #2, BUT start saving your receipts for 1 month and find out what you are really spending. THEN, see how it compares to your current numbers.

Photo by Tima Miroshnichenko on

Step 2. Find your mandatory expenses and the expenses that are optional to cut out completely

Glancing over your list of expenses, you can estimate which ones are optional and which ones are mandatory. Make a list of the expenses (and amount) of things that could be cut out completely. This is something as a household you can make flexible or if you are determined to adjust immediately, to remove all optional spending. (Cable, service subscriptions, magazines, etc.)

Photo by Karolina Grabowska on

Step 3. Find the expenses that are workable and reducible.

Next glance over again, among all your expenses, is there anything that can be reduced. Perhaps you have the best cell or internet package available- and it’s reducible. It adds up quick. Perhaps you go out to eat a lot, but you do not want to cut it completely because that is your only extended family time. This varies from one household to another. Do what works for your home. Some households do great reducing and cutting everything… other’s it’s like a bad diet, they do well for saving days 1-10 then on day 11, make a random $500 purchase. So do what works for your home and stick to it! This is where your frugal creativity can really stretch every dollar. Read my post 10 Ways to Reduce Your Grocery Bill and 20 Ways to be Frugal to Reduce Your Monthly Expenses for more ideas!

Photo by Karolina Grabowska on

Step 4. Gather your income records.

Now that you are completely discouraged, just kidding; take out your income records. Are you basing everything with the homestead on one income or two? Are you hoping to get things covered and then drop from two incomes to one? Or is the goal to be full time on the homestead at some point?

Whichever the case, gather your income records to see where you are right now. Are you in the green each month? In other words, are you bringing in more than what is going out each month. Believe it or not, there are people that honestly do not know what they spend every month. Perhaps you are one of these people, by choice or you rely on your spouse to budget. Take part. You’ll be more aware of what comes in and goes out every month. It’s a motivator when you see what you need and how close you are to getting it!!!

Photo by Karolina Grabowska on

Step 5. Create a projected budget.

Spreadsheets are your friend. Adjust the auto-sum on Excel or NeatOffice spreadsheets will do the math for you. Even if you like math, this is so handy later! Create a basic month to month budget for at least a year. (We do 18 months.) With sums on auto, plug in your numbers month to month. (If you do not have a computer to do this PRINT THIS simple monthly budget sheet.)

Photo by Charlotte May on

Step 6. Find ways to increase the Net at the end of each month and projected year.

Now that the rather basic budgeting is done, this is where my budget friends hone in on every dollar. Some of you gals are AMAZING!!! Although I learned to budget early, some have never learned. It’s okay, start now. In our home, we made it like a game. It was more fun. There were a few months we did challenges. Like no trash for a month. (You stop buying paper plates, napkins, etc. and start reusing old things for new purposes.) Try everything from reducing your grocery budget, not purchasing fast food, no dining out, soda free months, no sugar month, to only eating what you grow or raise 6 month challenge.

Besides cutting costs, look for small ways to reduce other expenses. Perhaps bartering or trading can reduce some of your cash flow. We love to share farm fresh eggs. A sweet lady started giving us bags of rice because she loved the eggs so much. Now we didn’t mind one bit bringing them, but she would have also gladly traded weekly because she made it clear she received it on commodities anyway each month. We happily accepted the rice as well! I love dear Christian friends that help one another simply because they can. BUT all that to say, is some do receive a lot of things they do not use and will gladly trade. Sometimes it is not goods, but services. Ask around. Reduce the outgoing expenses if possible or increase the incoming money if you are able.

Photo by Gary Barnes on

Step 7. List ways for side income to aim directly at a specific debt.

Brainstorm things you already know how to do that could shave off debt. Perhaps a plan to work 2 hours of overtime a week or pick up an extra shift and it be applied solely to that extra debt. Pick one to shave off if you are able. If debt is not an issue this list could come in handy to simply help you come up with a way to increase your monthly income for your homestead or savings. Perhaps things you already do on the homestead, but could gather a bit of revenue with a little more elbow grease or extra effort.

Photo by cottonbro on

Step 8. Eliminate all extra debt.

If you are able to do this immediately great! If not, keep plugging at it as you go. Make a plan to eliminate any extra debt if you have not yet.

Photo by Pixabay on

Step 9. Start a separate savings account or budgeted saving for the purchase or the growth of your homestead.

Once your debt is in check, start saving. Create your budget for purchasing your homestead or being a debt free homestead allowing you to have more revenue to work with for growing or expanding your homestead without debt.

Photo by Karolina Grabowska on

Step 10. Spend your money wisely.

If you haven’t purchased your homestead, start scouring the market to get the most for your money. Patience in this is gold. We have seen property dirt cheap one minute and the same piece of property triple a year later in resale value. In some areas it is cheaper to purchase a property open and build up. In another location it’s much cheaper to buy something older that has all the outbuildings and setup of land and invest in upgrades or a full remodel of the house. So, do your homework. This also goes hand in hand, that if you are not in a rush to purchase and you have a nice savings; many owners will sell outright and you will get a better price all around. (This is exceptionally true on a working or older farm.)

If you have already purchased your homestead, set aside within your budget for growth on the homestead. If you goal is to be more self-sufficient, set aside a budgeted amount to expand each year. The first years you may not have a lot to budget, $50 a month goes a long way. Learn to do this right away so you are ready once you have space and projects to work on.

Although this seems very basic, many times in a failing homestead,; the very basic principles are missing creating a constant struggle. Even the best of budgets will face strains hardships, but planning and learning to have a flexible budget will come in handing for any homesteader and home.

Photo by Pixabay on

Happy Homemaking! Happy Homesteading!!!

Did you miss the previous posts to this series?

~Preparing to Homestead #2: The TOP 5 Skills Needed to Homestead (You Can Learn These While You Wait) With 50+ more as a bonus!

~Preparing to Homestead #1: Things Needed- Even on a One Acre Homestead

~Preparing to Homestead in 10 Steps