Why should you start a budget?

Setting up a budget is critical if you don’t want to spend your way into future financial problems. You’re committing yourself to managing your money instead of letting your money manage you. You may find it helpful to see how you’re spending right now. Keep a note pad for a week and write down all the money you spend, including the dollar for a pop and the change for a snack. Sit down and add it all up at the end of the week and the numbers may shock you. Without a plan the small one or two dollar expenses really add up. When you manage your money you know what you can afford before you spend and there’s no surprise’s at the end of the month.

OK, where do I start?

First you will need to decide how you want to begin tracking your budget. You can use a program, make your own spreadsheet, or just use a pencil and paper. How you decide to track your budget is up to you, the key is making it a habit. Set aside 15 minutes a day to work on your budget, you may find that you only need a few minutes some days and you need 30 minutes on others. (more…)

Creating a budget is a great step in mastering personal finance. A budget will not directly get you more money, but it will take the money you earn and show you how to spend it better.

Your goal when creating your budget is a balance between the money you bring in, your income, and the money you spend, your expenses. In a more mathy sense:

your income = your expenses

The first step for creating a budget is to gather all of the information that shows how much income you have over a period of time, commonly a month for the first budget you do. Calculate exactly how much money you bring in any given months. If your income varies, do several months income and find the average monthly income for budgeting purposes. (more…)