Budgeting Tips - Budgeting 101

Let's face it: There is really only one way to get your spending under control. To create a budget! We all need to budget our money. This is some helpful budgeting 101 information. If you can follow the budget, you will be well on your way to saving money. If you can learn to budget your money, you will have your money under your complete control and you will be using your money the way you want to be.

The first step to creating a budget is to figure out how much money you are spending right now. You should track all of your expenses whichever way is easiest for you. There is tons of software out there that will categorize spending for you if you'd like, or you can use a simple spreadsheet to keep track. My favorite way to keep track of spending is on my cell phone. I use a pocket pc and I can track things in an instant with my downloaded checkbook software. Next, you want to take a look at your spending and set a realistic goal for a savings plan. My goal is to always keep at least six months of income in a savings account. This is just in case of an emergency. Anything excess of that goes into a savings account that earns interest. That way I earn interest on some of my savings.

While evaluating your spending, find out which categories you are spending the most money in. You should focus on cutting costs in those categories first. Keep track of every penny; even if it is a trip to the ATM, quick trip to the grocery store, or a movie night. Try to spend money you actually have. If you focus on not using credit cards and using cash on hand, this will help save on unnecessary finance charges and fees.

If you truly want to save money, the best way to do that is to focus on your necessities. Don't confuse this with luxuries. A necessity is something you cannot live without. My ultimate goal is to try to save 15% of my income a month. If I can save 15% to put in a savings account, anything I have leftover I allow myself to spend on luxuries. I cut costs by limiting my trips to Starbucks or eating out fewer times per week.

When I am working my budget, I feel it is best to leave out all income that I can't be sure is coming in. That way, when I do receive it, it is like a bonus and I can either throw it into a savings, or use it on some luxury items. If I don't account for it, it is extra. Also, I don't want to rely on it because what happens if I don't get it?

Keep focused on your goal. If you start receiving more money from investments or other income, do not start spending more. This will help reach your goal faster. Just because you get more doesn't mean you have to spend more. Look at it as getting more money, so that is more money you can put into a savings somewhere.