Budgeting for Those Bereft in Budget Sense:

Have an income and wonder how it disappears?  If you have a problem with spending all your income, it is a problem, but can help you better relate to the budget realm. The purpose of a budget is to spend your income, but with designated purpose. A budget is essentially a mapped out plan marking the key areas of expenses such as: mortgage bills, gas, and groceries. Ok, lets throw in a little fun too.

Here are some steps to writing up a balanced budget:

1. Keep Tabs on Spending Habits for a Week – write down everything you buy from morning coffee at Starbucks to movie rentals, just to get an idea of where your priorities in spending are and give an awareness of how much is spent during a week.
2. Retrieve any Financial Statements You Have - mortgage bills, repair bills, anything having to do with income or expense to help find an average in monthly spending. This is spending that is a necessity. You need to make sure you have the funds for these when the time comes.
3. Calculate any Income – calculate your income before and after taxes. If you are paid hourly, know how much your check will be before your boss hands it to you. If you are self-employed, a consultant, or freelancer, budgeting your income is even more important.
4. Make a List of Monthly Spending – i.e. bills, mortgage, rentals, groceries, schooling, college loans, etc. (refer to list in #1). Monthly budgeting can be astonishing. Once you see how much money you frivolously spend, you will be able to hunker down and fix the problem.
5. Split Monthly Spending into Two Categories: Established Expenses and Unestablished Expenses – established expenses need to be paid off each month and include: credit cards, bills, mortgage, etc. Unestablished expenses would vary each month and would include: gas, groceries, shopping, vacations, etc.
6. Calculate Total Income and Total Expenses – ideally, you want to have your income outweigh your expenses and have some left over for savings. If expenses outweigh your income, the unestablished expenses will have to be altered to fit your budgeting needs.
7. Check if Adjustments Need to Be Made – Is everything on your budgeting list necessary? Could some things be simplified or taken out from your schedule? Cutting back, is the only way to get out of the red.
8. Check Your Budget Monthly- it is imperative to check up on your budget monthly to know where your money is going and if you are staying on track. Monthly budgets will change, the heater needs to be turned on in winter, an addition to the family, and sometimes you “need” to purchase that new television. Keep tabs on your budget, punching him in the side if he gets out of line.

Having a plan when it comes to money is the best way to be proactive about spending it. When income is distributed among designated expenses and things get paid off, goals are achieved, and spending is curbed in all the right places. Curb your appetite for spending and enjoy life more.

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