The Easy Guide to Budgeting

Where is your money going? Do you sometimes check your wallet, only to find a little moth flying out, and wonder...where did the money go? There is a solution to this problem. It's called budgeting. Oh yes, the dreaded "B" word. The honest truth is, budgeting isn't so bad. Budgeting is just a way of controlling the money flow, and making sure that you do not spend more than you make.

Organize yourself. On a sheet of paper, write down the month that the budget is being prepared for. Then write down the pay period that budget is concerning. For example, military members get paid twice a month. Their first payment is from the first of the month. The second payment is from the fifteenth of the month. So since the first payment is on the first, all he money that is paid will have to carry that person on through the fifteenth. You can see why you have to have a plan. If you don't plan the money flow as you should, your money will be gone before your know it, and your bills will be piling higher than the great pyramids of Egypt.

Find out exactly how much income you make. Add any extra monies that you acquire. If you make money on Associated Content, add a slot for that money. Be careful not to over-estimate your income. Add tax refunds, raises, you get the picture.

After that, you have to make a list of everything you spend money on. Get an average for each bill. For example, if your water bills range from $45 to $60, on your budget worksheet, allow $60 for the water bill. Do this with all your other bills. A budget is composed of the following components: savings, food, utilities, housing, clothing, medical, entertainment (eating at restaurants, going to the movies), transportation, and any debts and loans that you have (such as credit card bills). You can adjust this to fit your personal lifestyle. Just make sure to include absolutely all the money that is going out of your pay. Everything.

Add up everything you owe for the month. Separately, add up your income. Subtract the amount you spend from the amount you make. If your calculations result in the negatives, you have a problem. In that case, you are spending more than you make. Look at your spending list and find out what you can decrease money on. Are you eating out too much at nicer restaurants? Are you spending too much gas? Are you buying unnecessary, overpriced clothes? Cut back on whatever it is that is posing a problem in your bill. If you are in debt, set a specific amount of money you'd like to pay each month. Always pay more than the minimum amount asked of you.

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I am providing a sample budget below:

MONTH: August 2007
PAY PERIOD: 1 August - 15 August

MONEY COMING IN:
Work Income: $900
Associated Content: $20
Church bake sale: $110
Income Total: $1030

MONEY GOING OUT:
Savings - $96
Food - $200
**Groceries - $150
**Eating out: $50

Housing - $415

Utilities - $130
**Electricity: $30
**Heat: $50
**Phone: $35
**Water/sewer: $15

Medical - $100
**Medical insurance: $50
**Optometrist: $20
**Medicine: $30

Transportation - $120
**Car Payment: $100
**Insurance: $20

Outgoing Total: $1061

Total Income (minus) Outgoing Total = $-31

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In this sample budget, you can see that the person spent thirty one dollars more than she made. What she could do to prevent that from happening in the future is cut down on the "eating out" aspect of the budget. A successful budget is done every month, for every pay period. You should never be spending more than you make.

See? That wasn't so bad, was it? I'm sure with practice, as long as you follow this guideline, you'll be an expert budget-teer in no time. Good luck with your finances, and happy savings!