Finally, a Budget that Works

Many of us are living from paycheck to paycheck, or "borrowing from Peter to pay Paul" each and every month, with no hope of ever getting out of debt. I have found a budget that will work for anyone and can be customized to fit any size family or income. I am neither a genius, nor a millionaire and I use this budget because it is easy to set up, easy to stick to, and allows me to spend money, as well as save it, at the same time.

You can keep track of your budget in a notebook, on an Excel spreadsheet, or in a simple text file where you will have to enter all totals by yourself, but because it is very simple to set up, anyone can do it and make it work for them.

You will have three columns:

1. Savings

2. Household

3. Mad Money

The "Savings" column will be the first and most important part of your budget. Each and every week, or biweekly if that's how you are paid, you "ABSOLUTELY MUST PUT 10% OF YOUR NET PAY "(money left over after all deductions), "INTO SAVINGS". If you make it a direct deposit you will not even miss the money and over time, your savings will grow. Never say "I'll put it in next week" because "next week never comes". This is the only area of your budget that is not negotiable, unless of course you can save more than 10%.

The "Household" column encompasses all household expenses, rent or mortgage, utilities, taxes, insurance, food, car payments, gas, medical bills, etc., etc., etc., and will be your biggest expense. After listing all your bills the deduction of your paycheck to cover these expenses should be anywhere between 70 and 85 percent of your net pay and can be adjusted against Mad Money, "but never against savings". You absolutely must cover your bills every month and some creativity here will be necessary if you are behind. Most companies will work with you whether it entails lowering your payments, lowering your interest rates, or other ingenious ways of helping you to get caught up. Never be afraid to call them and ask for their help. It is better to face it head on and work out a payment plan that will catch you up than avoiding the phone calls and letters that are sure to keep coming if you don't deal with them immediately.

The "Mad Money" column is just what it says. You work too hard to not enjoy spending some of that money on you. A Friday night pizza and a movie, a day at the amusement park with the family, a special gift to yourself that you have always wanted is, after all, what we work for. If we can't enjoy some of the money we make, and just scrape by month after month, it's really not worth working. We have to enjoy life too, and it's okay to do that, but never take money from savings or household expenses to do it. If it's something special, and a little more pricey than you can afford right now, save for it. If all the mad money isn't spent one month, set up a special "Mad Money" savings account with the extra and you'll have enough for those extras in no time. This is unfortunately how some of us got in our financial dilemma to start with. Instead of saving up for something we wanted we let a bill slide for the month, or put the item on a credit card, and now we may not even have that item we just "had to have", but we're still paying for it.

After setting up your budget, if you find your expenses outweigh your income, consider taking on a part-time job just for a short time or finding unnecessary items in your budget that you can do without, even just temporarily. Look at your phone bill, magazine subscriptions, cable bill, or any other items that can be downgraded or temporarily discarded in order to get you on your feet. There are many free or inexpensive things you can do for entertainment such as going on a picnic or visiting an art museum, or even volunteering in your community to enjoy your time off work and still feel that you've used the "Mad Money" part of your budget, even if it didn't cost you any money to do it. Use some of the "Mad Money" to help catch up on a bill but still save anything of it that you can for the next time you can spend your "Mad Money". Even $10.00 a week adds up quickly to take the family somewhere nice every few months, and in the meantime you will still be enjoying your Mad Money part of your budget without actually spending any of it.

This is the most flexible budget I have found, and the great thing is, that it works. The savings will be there when you absolutely have to use it, the bills will be much easier to manage each month when you get them under control, and you will still have mad money to enjoy life. After all, the purpose of working is to make our lives better, not to make us cringe every time we go to the mailbox or the telephone rings. It may be rough going at the beginning but if you stick to it, it will work for you.