Making A BudgetMaking A Budget The Easy Way By Identifying Your Financial GoalsA master carpenter would not set out to build a house without a good set of plans. Put simply, the house would never get built. Yet, most of us go about our lives with no financial plan and little thought given to financial goals. No wonder we risk ending in debt and never realizing our life's dreams. Making a budget or financial plan is crucial to our financial well-being! Do you have a spouse or partner? If so, you need to prepare your budget together. Talk things over and decide what your short-term and long-term financial goals are. Are they to own your own home, take a world cruise, eliminate credit card debts, or finance your eventual retirement? Goals are essential. The better your goals, the better they will serve to keep you motivated for the long haul. Next, plan a financial pathway to achieve those goals by developing a realistic budget that you can both live with. Budgets need not be complicated; they are best kept simple. You can just use a pencil to jot down your figures on a sheet of lined paper, or you can create a more detailed budget using spreadsheet software and budgeting spreadsheets. The advantage of using home budgeting software on your computer is that it's very easy to make changes and obtain printouts. Nowadays, excellent budgeting software products can be obtained at little or no cost. For an easy-to-use, free online spreadsheet, try Google Docs & Spreadsheets by signing up for your free Google account. Google's quality online program is compatible with PC and Mac computers, and it is much easier to use than Microsoft Excel. Also, a variety of simple home budgeting templates can be found on the Web. Simply use your favorite search engine to search for "budgeting template" or "free budgeting worksheets" using quotation marks for best results. Select one of the results you like and print it out to work on. How To Make A BudgetA useful personal finance budget should list both your monthly income and outgo. It should also project expected increases and decreases in income, and offer some buffer for unexpected expenses.Most important, a budget should never reflect a starvation debt-diet. Such budgets never work out; they are too rigid for the long haul and only lead to discouragement. When making a budget, set realistic amounts for the basics: housing, utilities, insurance, transportation, food, and clothing. Also provide a reasonable amount for occasional treats and entertainment, but keep in mind that savings should come before any nonessential spending. Whether you are using a legal-sized pad or an electronic spreadsheet page for personal budget planning, divide the page into two columns. In the first, list all income and in the second list all monthly expenses. It's that simple. In the expenses column be sure to include ALL your regular monthly bills including rent, groceries, car expenses, eating out, and so on. Add about 10% to your figures to cover unexpected expenses; they have a habit of cropping up. Now, total both columns and compare. Hopefully, you will have more income than outgo. But, if it turns out you have more outgo than income, you have two options: you must either increase income or decrease expenses. In any event, examine your individual expenses to see whether some may be made less. Any dollars you can save now are dollars that can be used to decrease your debt and improve your future. You Can Achieve Your GoalsPerhaps in the end, you will only be able to save a small amount on a monthly basis, but even that small amount will help you to eventually reach your financial goals. Remember, a drop at a time fills the glass.Making a budget is an essential first step to achieving your life's dreams. Read the follow-up to this piece, a free budgeting tip that shows how to increase income and reduce expenses: Free Budgeting Tip TOP of Making A Budget RETURN to Budgeting Finances HOME to Get The Best Credit Cards
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