Budget is not a four letter word! A budget is not bondage, nor is it punishment in any way. A budget is the difference between planning where your money goes, and wondering where your money goes.
Simply put, a budget helps you to plan your spending so that your needs are met, and you can achieve your goals. This actually is a freeing experience because you do not have to wonder about how you are going to pay your bills, you plan how to pay your bills.
1. Make a list of categories. This can be done on a computer, or with old fashioned paper and pencil. Housing, utilities, food, clothing, supplies, gas, car, insurance, etc should all be included.
2. Enter the amounts that are fixed on a monthly basis, housing, telephone, loan payments, etc.
3. Take costs that are quarterly, annual or whatever, and divide the amount so that you know the monthly cost. Be sure to include everything that you can think of; registration, insurance, etc.
4. Assign amounts to the categories that are needs; food, clothing, gasoline, etc.
5. Add categories for things are extra; eating out, entertainment, etc.
6. Include categories saving money for future special purchases or plans, appliances, vacations, Christmas etc.
7. Compare the figures. The amount assigned to the categories when added together cannot exceed your monthly income. If it does, then you need to either cut things out of the budget, reduce the amounts in the categories, or find ways to increase your monthly income. These are tough decisions to make, but your monthly expenses cannot exceed your monthly income without causing serious problems. (Unless you have substantial cash reserves.)
8. Keep track of your spending. It is very important, to track where your money is actually being spent. As the month is progressing, you can make adjustments to your spending. This is the tough part. Setting up the budget is one thing, staying on the budget is another.
I have introduced both of my sons to budgeting. They have both told me that they have seen the benefits of having a budget and plan to continue with it. I believe that it is very helpful at any stage in life and it is never too late, or too soon, to start. Start with something simple, and add categories as you get the hang of it.
Any questions?
a whisper in the wind 
July 8, 2008 at 4:44 pm |
lalalalalalalalalalala…
July 8, 2008 at 5:36 pm |
When I hear people talking about having no money until payday (and payday could be 3 or 4 days away) or how they are going to pay a bill – I am once again reminded of how blessed it is to live on a budget 🙂
July 9, 2008 at 11:48 am |
Sigh….. tj, you can lead a horse to water…
Gloria, I too, know many people who live paycheck to paycheck and I am very happy to live on a budget, because of the benefits that I have enjoyed from the practice.
July 9, 2008 at 12:05 pm |
LOL, I really do think that budgeting is a good thing. Really I do and someday I will get it down. In my defense I have come a long way. But being fiscally conservative does not come natural to me as for you. Do you think that would fall under a talent you were given? It seems to be so natural for you and most everyone else grumbles or moans when the word budget is mentioned. Thats it, I just wasn’t born with that talent. Does that get me off the hook??? 🙂
July 9, 2008 at 12:12 pm |
tj, You have come a long way, and it does come more easily to some than to others. Keep up the effort, and you will continue to see benefits. It will get easier, if not easy, eventually.
July 10, 2008 at 3:32 am |
Thank you Larry Burkett….no really, a budget is a good thing, I know. Of course I tell myself that going to the dentist is a good thing too! I have heard of a budget being called a “money map” by budget gurus and I kind of like that analogy, it’s nice to know you aren’t just wandering around aimlessly with one’s finances! Thanks again for the good advice.
July 10, 2008 at 12:19 pm |
Susan, the “money map” is a good analogy. Thanks for sharing.