Budgeting Made Easy!

Well, now that you have your finances in your software with all the wonderful bells and whistles, and you've gone through your spending habits and seen some places where you can save, let's take it one step further and create a personalized budget.

No, don't cringe from the word. I know you hear it at work and every manager you've ever had grumbles and moans about being "over budget" or "there's not enough money left in the budget for anything" but don't worry. No one will come and demote you for going "over budget" here. Our budget will be a working document - just a guide, not a boundary. Budgets really get a bum rap, but so few people really know how to use them (or really create them, for that matter) that people believe budgets are something to be feared. I'll show you how to create and use a budget that will really help you, not hinder you.

You've already done the hard work here in the last article (see: Start a Savings Plan Now!) so this won't be too hard. You can even use your nifty new financial software to help you out! (If still do your home finances by hand, these principles still apply, but you may want to consider getting some software. You've already got the computer, what's a few dollars more? It makes things faster and much easier!) Every software package should have a budgeting feature, where it takes the information you have already put in it and annualizes the dollar amounts. It's all done for you - you don't have to enter anything new in. Just find it (see your manual) and print it out!

The hard part comes when you sit down and really go through your expenses. Part of this you have already done in the last article, but here we're going to pin down a dollar figure and plug it into our budget. So, you need to ask yourself, truthfully, am I really going to eat out 3 times a week? Am I really going to spend $1,650 a month on groceries? Can I economize? You can really play with the numbers and see what benefit you will get from saving. If you can knock off, say, $300 a month from your grocery bills, $150 dollars a month from dining out and $75 from renting videos instead of going to the theater - you've just saved $525 a month! That's $6,300 a year - with only a little effort from you.

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