How well you manage your money, whether you are saving it, spending it, or just trying to keep track of where it went, will influence your quality of life than just about anything this side of good personal hygiene. Without a budget, many of us just muddle through, trying to stay one step ahead of our bills. If the word "budget" makes you cringe, think of the process as (1) summarizing how you spend your income and (2) creating guidelines for spending. No blame, no shame, no deprivation, and no guilt. Thinking of a budget as a financial diet is a sure way to set you up for failure. A budget is simply (1) a tool to increase your consciousness of how and where you spend your money and (2) a guideline to help you spend your money on the things that are most important to you. The following are tips on how to create your own financial budget: .
Understand and estimate your current spending patterns. Track your monthly spending and try to account for every dollar spent. For the next month or two, think very closely about how your money is spent. Every time you buy something, pay a bill, or dispose of any of your money, make a strong mental note of what it is being spent on. Better yet, at the end of each day write down a list of each expenditure and what it was used for on a piece of paper or in a spreadsheet. Try to think critically about each dollar spent and whether or not it was a required expense.
Create your current budget. Now it's time to create your current financial budget. To do this, you need to quantify all of the spending patterns you observed in step one. Start by using a spreadsheet budgeting template such as Excel. Then proceed to fill in the template by classifying all the money you currently spend into the appropriate categories. If you would like to use Palm Pilot, you may do so. The budget should resemble your current spending patterns, so be sure not to overlook small or routine expenses.