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The Micro-budget Method

An overview of micro-budgeting

Today I’m making up a new word: micro-budget.  Definition: a budgeted amount that seems ridiculously small to the average american.

Last week, I was reading an article about overspending your budget by Sarah at Lemon Blessings.  She has some great advice there, but do you know what my very favorite thing was?  She said her clothing budget for the month was $10.  Ten. Dollars.  Do you know why I liked that?  Because my monthly clothing budget is also ten dollars!

I was so excited to find someone else who lived on a “micro” budget like me!  But that really got me thinking.  Most people out there (dare I say, most people reading this right now) would gasp in horror at the idea of such a ridiculously small clothing budget.  “How do you get what you need with so little funding?” you ask.  Well, let me tell you.

You need less than you think

Seriously.  You do.  As an adult, you really do NOT need to buy new clothes on a yearly basis.  You may need to buy a professional wardrobe after college, or buy some winter gear when you move further north, but honestly, you don’t need new clothes every year.

Even your kids don’t need a packed closet – we typically aim for 8 outfits per kid (this is ages 2 and up – babies do need more!).

If you need help making a budget, check out this 10-minute tutorial for writing a budget spreadsheet.

Make a little go much further

While I don’t think that scrimping and saving is every going to make you wealthy, I have a ton of experience living on a very small income.  For me, micro-budgeting isn’t about growing wealth, it’s about maximizing every dollar and spending intentionally.

With that in mind, I want to make sure that when I spend my limited resources, I’m spending it on things I really need, and spending it effectively.

Some costs, like the price of gas, car repairs, or rent, I have limited control over.  I have to pay those things and there’s not alot of ways to make it cheaper.  That means I have to learn to make other expenses less costly.  The expenses that I have the most success shrinking are clothes, groceries, travel, and eating out.  These are the categories that I have a micro-budget for, and here is what my monthly budget allocation is for those –

Clothes – $10

Groceries – $350

Travel – $20

Eating out – $20

Total: $400

You can read more about saving on groceries in my meal planning article.

Clothes, for example, is allotted $10 every month.  That’s it.  This can roll over, in theory, but if we have other expenses or over-spend on groceries, it’s one of the first places we cut back.  Living on $10 a month of clothes is pretty hard, and we don’t want to do it forever, but we have debt to pay off and we’d rather be debt-free than trendy.

$10 a month is enough to keep our kids in the right-sized clothes, since we also get a few items from grandparents now and then.  My husband and I very rarely get new clothes.  One notable exception to this was when my husband started law school – we spent a big chunk on some nice suits for interviews and competitions.  When he graduated three years later, we coughed up again for another nice suit (the old ones were pretty well-worn!) and new dress shoes.

However, even if/when we are able to increase that budget, I would only increase it to $40 – $10 per person each month.  And I really think that is enough.

Methods and suggestions

Here are some of the methods I use to survive with such limited spending power.

Buy off-season

We buy all my kids’ clothes a year in advance.  The flip flops and shorts my son is wearing?  We bought them last August on the clearance rack for $2.

Watch for the real promotions

Most clothing company promos are garbage.  They don’t actually save you money.  However, there are a few sales that are undeniably a great deal.  At Gap recently, we ran a deal for 30% off sale items.  We ran this promo at the end of July, to clear out mark down items to make way for back-to-school inventory in August.  Most sale items were marked down to $10 or less.  That brought the prices on tons of the kids clothes down to under $5.  Sure, the items were off-season, but buy a size up and put it on your kids next year!

Save by buying used

The best way to save on kids clothes is to buy used.  They grow so fast, is it really worth spending $500 every three months to put them in brand-new name-brand clothes?

We buy second hand, but I only buy certain brands.  I love Gap (no surprise there) and I love the way their jeans hold up, so when I go to Kid to Kid, I hunt through the racks for Gap-brand jeans.  Usually, they are still around $5 a pair, so I try to wait until they do end-of-season sales with extra discounts.

Save by buying off-brand

Sometimes, off brand makes a difference.  In my baking, I hate using off-brand butter.  I don’t know what the difference is, but my cookies come out greasy when I use cheap butter!  Besides that, I’m all about off-brand.  We love veggie straws.  Wal-mart recently release their own brand of veggie straws that are cheaper, so we gave them a shot and guess what?  We actually like them better.  When you’re getting the same product, the branding makes no difference.

A great example of this is nuts.  Name-brand almonds are almost $2 more than store-brand.  Why?!  I guarantee they buy from the same supplier.  I promise your grocery store isn’t going out and finding cut-rate nuts to sell you – they are the exact same thing.  Why pay for a label?

Another example – I hate buying used shoes.  I just do.  It grosses me out.  My middle ground is buying off-brand shoes.  I love Old Navy shoes, I find they hold up long enough for my kids to get wear out of them and sometimes even pass down.  I’ve had a lot of success buying obscure brands on Amazon as well (these are my 3-year-old’s summer shoes and they are super sturdy!).  It’s really about knowing how to shop around, which is easier than ever thanks to the internet!

Buy in-season

To save on groceries, buy what is actually in season!  Watermelon is way cheaper in July than in December.

Be a mystery shopper

We save on eating out by doing mystery shops for meals.  We use apps to collect reward when we eat fast food (I’m looking at you, Chick-fil-A!).  If we are celebrating and going somewhere pricey, I’ll buy gift cards at Sams Club or Costco where you get $60 worth of gift cards for $50.

Supplement your budget

If you really do want your budget bigger, find ways to earn more.  I wrote about my favorite hacks for making extra wiggle room here, here, and here.

For more help with budgeting, you can read about how I budget in excel, or read about different budgeting methods.

Plan for big expenses

If you know you need a new suit next year, plan for it and start saving now.  If you want to do a big shopping splurge for back to school, or increase your grocery budget for thanksgiving, you can fit it in your budget by amortizing the cost over several months.

We afford all of our traveling by saving and spreading out the cost with amortization!

Detailed info about amortizing large expenses here.

Spending more fills your life with excess

The idea behind a micro-budget is simple: you need less.  We are surrounded by so much and we live in a consumerist society.  It’s exhausting. Having less – and changing your mindset so you buy less – will free up both your wallet and your mind by eliminating so much excess.

I challenge you to try making one of your budget categories microscopic this month!  If it’s clothes, try finding a new way to wear something in the back of your closet.  If it’s groceries, try cooking with what you have and only buying the bare necessities.  It’s totally do-able!

Live on less than you think with a micro-budget

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