Budgeting

There can be little doubt that budgeting is a really useful way to plan and control your expenditure, but the reality of actually putting it into practice is often so daunting that we just never even start. There is a tendency to think of budgeting as a painful kind of rationing, making yourself go short of things you want and not being able to spend any money. In fact this is not the case at all. Good budgeting is just a way of reorganising your finances, so that you can get the most out of the income you do have. If you get it right, proper budgeting means you can actually identify where you are spending money that you don't really want to, and you can then save money and divert it to the things you thought you couldn't afford.

In the absence of some guidelines on how to prepare a budget, not being quite sure where to start can be enough to prevent people from getting to grips with household budgeting. There are two distinct elements to budgeting. The first is the preparation of an initial financial statement detailing all your income and expenditure, which will give you a clear picture of your current situation. You then use this to identify the areas where your spending is not how you want it to be, and set a budget for your future spending. That can sound bad enough to many people, but the tricky part is then actually sticking to that budget by monitoring what you spend every day.

How to prepare a budget

If you want to prepare a personal budget manually, there are household budget forms online that you can download free of charge. These will help to guide you through the process and ensure that you do not miss out any areas of income or expenditure. While you can then use such forms to set a monthly budget for yourself, it is up to you to work out how you monitor and record your daily spending and measure it against your budget.

How Home Budgeting Software Can Help

The reason home budgeting software tools are so popular is that they make the difficult job of budgeting so much easier. The basic principles are exactly the same as for a manual budget, but a good budgeting tool will guide you through the process of entering your initial information, then make it very easy to identify the areas where savings can be made and where you need to change your spending pattern. The big advantage, though, is in the ongoing monitoring and measuring of your spending, which can be a real challenge to do properly without a budgeting software tool.

When selecting home budgeting software, it is a good idea to go for something that has either a free trial period or a policy where you can get your money back if you don't like it. That way you have no risk and can make sure it really is the best option for your circumstances. There are lots of home budgeting software packages out there, but you may find that some of them are actually more sophisticated (and expensive) than you require. Some have the facility to deal with lots of different accounts, stocks and shares and all sorts of things, which for many of us are not really what we need the tool for.

You don't want to pay for lots of functions that you are never going to use, so go for a modestly priced, straightforward product. You also want a home budgeting tool that you will be happy to use regularly, so make sure you find one that is user friendly and not over-complicated.