Budgeting. Tracking expenses. Sounds about as exciting as doing laundry. But I track expenses and do a budget because they give me the data to answer tough questions and make good financial decisions, such as:

• Could we survive on one income if my husband or I got laid off?
• If we put new flooring and counter tops in the kitchen, where will the money come from?
• How much did it cost me to drive my nine-year-old car last year?
• How much of our income is unaccounted for? In other words, I do not know where it went?
• How much did we save last year?

It's always good to have a budget, to know how much you spend and bring in. But there are times in your life when it's more important than others. Anytime you go through a major life change, your expenses or your income (or both) are going to change. If one of these life events has happened to you recently – or if you think it might happen in the near future – this is a good time to get serious about keeping track of where your money goes:

• Marriage or divorce
• Having a child
• A child starting college
• Moving
• Changing jobs
• Retiring
• Caring for an elderly parent
• Deciding that you will get your finances on track

There are lots of different ways to go about tracking your expenses. In my opinion, the most important thing is that you do it, not what tool you use. Here are some ideas.

• Save all your receipts and paid bills. Collect them in an envelope or box. Write the category at the top of the receipt (i.e, food, entertainment, gas). Once a week, add up the expenses in each category.
• Carry a small notebook in your pocket or purse and write down everything you spend. Tally it up once a week.
• Use a checkbook register; draw extra columns in it so that you have a column for each major spending category. Give yourself a budget for the week or month in the first line. Then record and subtract each expense to keep a running total of how much you have left in each category.
• Use an online program or software on your computer to download transactions from your checking account and credit cards. Manually enter expenses paid by cash. Categorize your expenses. Generate an expense report and let the program do the math for you.

You might try one method and decide it just doesn't work for you. That's OK. Maybe you can adapt it so it works better for you. Switch to another technique. Or try one method for cash expenses and another for things you pay by debit or credit card. You may not track your expenses forever, but doing it for a few months will give you a good sense of what's going on. When another life event strikes, you can do it again.

There's an old saying that knowledge is power. Knowing where your money goes can give you the power to reach your goals and to change your habits. It's definitely worth a try.

Have you noticed your grocery bill increasing? In February 2011, food prices increased 3.9% over prices in January , and food prices continued to increase in March with the eighth straight monthly increase. Overall, world food prices have reached a record high this year. OUCH! Rising food costs are pinching our already tight budgets.

Why are food prices going up? Economists seem to agree that it is a combination of factors.

1) As populations grow worldwide, there is more demand for food. And, as countries develop, there is a tendency for people to want to eat more meat. For example, urban Chinese increased their consumption of chicken 219% per capita from 1983 to 2006. It takes more resources to produce meat calories than grain calories – something to think about the next time you order a roast beef sandwich versus a humus wrap.

2) Typically when the price of a commodity – like corn – goes up, the demand goes down. However, the current high demand for biofuels keeps demand and prices high.

3) Worldwide we have less stockpiles of food. When disasters affect food supplies we see prices increase.

4) Unusual weather patterns worldwide have affected these food supplies. We have seen floods in Australia and droughts in China and Russia. The droughts last summer started the crop price increase. Global wheat prices more than doubled during the second half of 2010. Unusual winter freezes this year in Florida, Texas and other southern U.S. states caused a decrease in our supply of fruits and vegetables, and prices to increase.

What does this mean in our neighborhood – and throughout the world?

Prices of staple food items like wheat, corn and sugar have risen by more than 50% in recent months. But our food prices haven't increase that much at all. Why? Food prices in the U.S. are largely driven by other costs (such as labor, marketing, and other overhead costs) rather than the price of the ingredients or commodity. For example, according to food economist Abdolreza Abbassian at UN Food and Agriculture Organization, 2% of the price of a loaf of bread in the US may be the flour price. In developing world countries, it might be 70% of the price.

The World Bank has reported that as many as 44 million more people have been forced into hunger because of the rising costs of food. This is fueling conflicts in Libya, Tunisia, and Egypt. Time magazine has a very cool image showing how much people pay (as a percent of their income) for food in different counties. Take a look and see if you notice any correlation between the countries in purple (those spending over 36% of household consumption on food) and headlines in the news.

People in the U.S. also feel the impact of food price increases. A study reported in the Chicago Fed Letter, found that those the hardest hit with food price increases are people in the bottom income quartile and food stamp recipients. People with low-incomes eat more food at home and less in restaurants, compared to other income groups. The food item cost affects the price of food more at grocery stores than at restaurants.

I think it's amazing how global changes become important when I'm shopping for food in my hometown grocery store. Stay tuned to future blogs about tips on how we can manage the increases in food prices, and keep our grocery bills manageable.

If you have tips to share, click on my name below and send them to me please. I will include them in future blogs.

The new unemployment numbers for last week came out this morning, and the news was disappointing: There were 412,000 applications for unemployment benefits last week, an increase of 27,000 over the previous week. It is a reminder that many of us are still in financially difficult times. Maybe this is a good time to review some of the things we can do to minimize the financial fallout from layoffs, reduced hours, and other events that hit us in the wallet.

1. Figure out how much you spend and how much income you have. You can't plan changes until you understand the current situation. So pull out the bills, receipts, and checking account statement from the last month or two. Use that paper trail to make a guesstimate of how much you've been spending in different categories. Then, project how much you will spend going forward. The budget sheet from our Getting Through Tough Financial Times website gives you columns for "before" and "after."
2. Know what you can change, and what you can't. Fixed expenses – ones that are the same every month like your car loan payment and the cable TV bill – often involve a contract and are harder to change than flexible expenses such as groceries, clothing, and entertainment. So tackle the flexible expenses first. For ideas about how to reduce different types of expenses, check 66 Ways to Reduce Expenses or 101 Ways to Save Money from the Alabama Cooperative Extension System.
3. Don't get caught off guard. Not all expenses come monthly. My water bill comes every other month; my car registration comes once a year; auto insurance is once every six months. Then there are seasonal expenses, like holiday gifts and back-to-school clothes and fees. The real killers are unexpected car repairs and the like. Make yourself an annual calendar of seasonal and periodic expenses, and a guess about "unexpected" expenses using this simple form. Post it where you can see it, so these upcoming expenses won't be surprises.
4. Know how much you owe. For each debt, make a simple chart of who you owe, the payment amount, the total owed, the interest rate, and whether or not the loan is secured by one of your assets. For example, your car loan is secured by the car; the lender can take the care if you don't pay. Use the online PowerPay tool to figure out how long it will take you to pay off those debts. PowerPay will help you map out a plan to pay your debts off faster. See how much faster you'll pay off bills by paying just a few dollars more per month. When you pay off one bill, add the amount of that payment to the debt with the highest interest rate.
5. Decide which bills are most important to pay. If you can't pay all your bills, prioritize. Compare the consequences of not paying different bills. Top priority is usually protecting your family and keeping a roof overhead. If you need your car to get to work, your car loan may come first. While most debts can be resolved through bankruptcy, child support, income taxes, and student loan payments cannot
6. Contact creditors if you can' pay. First, figure out how much you could pay. Then, call the creditor and ask them to work with you. Not all creditors will give you a break, but some will.
7. Get help if you need it. Credit counseling can help you work out agreements with lenders and get things back on track. Look for a credit counseling agency by contacting the National Foundation for Consumer Credit at 1-800-388-2227 or www.debtadvice.com.

It's easy to put off making changes in our spending. You may be thinking, Maybe we'll find work soon, or, I don't want the family to suffer. But the sooner you make adjustments, the better it will be for your family down the road.

How have you adjusted to get through tough financial times? Click on my name below to send me an email with your best tip. I'll share those in a future post. In the meantime, check our website for more detail on the ideas I've shared here, plus lots more about Getting Through Tough Financial Times.

University of Illinois Extension, through the efforts of its Consumer and Family Economics Team and Family Life Team, has launched a new website to help people learn about their long-term care options and be able to take concrete steps to prepare for the possibility of long-term care. The Long-Term Care: Talking, Deciding, Taking Action site is found at http://www.longtermcare.illinois.edu/ and it contains interactive learning modules, including videos and fact sheets and other resources.

The website emphasizes the need for communication in the process of planning for the possibility of long-term care. The website works to develop a person's ability to hold sometimes difficult discussions with spouses, family members, and professional service providers which is an important aspect in planning for long-term care. Many, if not most people, are uncomfortable expressing their intentions regarding their long-term care wishes and ability to pay for care, should they need services.

In addition to communication, the website provides practical web-based consumer education on four highlighted topics of housing, family dynamics, caregiving, and financing. Given the encompassing nature of long-term care with its social, emotional, physical, financial, medical, and housing dimensions, the site draws out the interconnections between the four highlighted areas.

A team of six University of Illinois Extension staff developed the website tool for use by consumers and also by educators and trainers working with community agencies. Additionally, some financial professionals may recommend the website to clients as an educational tool. Some companies or organizations may find the Long-Term Care: Talking, Deciding, Taking Action site complements their human resource offerings or other employee education programs.