Budgeting

There are so many personal finance programs and books on the market, trying to decide where to begin can make your head spin. Besides the myriad of options on the bookshelves and internet stores, there are dozens of popular, national programs that can cost hundreds of dollars. I've seen people spend over $100 to $150 on such programs and upon completion ask the question, "okay, how do I get started." I find it unbelievable to spend that much money and time on a program and still not know how to get started.

Most of these books, programs and seminars focus on the much larger picture of Financial Planning and wealth building which are great resources to pursue after you get your spending under control, paid off all your debt, live within your means and have money left over to invest. To get started in the world of personal finance, most people just need a simple budgeting program to help them get started.

I'm also a proponent that budgeting should not be a "look back" to previous months spending and then model that for the coming months. If you're overspending and base your future month's budget on a bad model, you really don't have a "going forward" budgeting strategy. It will be extremely difficult, if not impossible, to accomplish your financial goals.

My definition is that budgeting is a set of learned behaviors that help you manage your expenses relative to your income and provide you with a strategy and discipline to get out of debt and reach your financial goals.

To be successful, it's important to start with what your goals are and what motivates you and write them down. Then you can analyze your income, expenses and debt with a budgeting tool to figure out how you can get on track to meet those goals. The last key component is to have some structure and discipline to your budgeting process so that you review it regularly and track how well you are progressing toward your goals. I summarize the 3 components as:

• Motivators / Goals
• Knowledge (i.e. "how to")
• Discipline

Once you've got the understanding that budgeting is more behavior-based than analytical, then it's time to research the types of budgeting tools that are on the market to meet your requirements. If you're already an expert budgeter and want a tool to also track your investments and wealth building strategies, that's very different program than someone that just starting out looking for a simple, inexpensive budgeting tool. There are just a few categories of budgeting tools available:

• Pencil, paper and calculator(Cost: $0 if you have a calculator)
• Computer Spreadsheet such as MS Excel (Cost: less than $20 for the forms; MS Excel extra if not already installed on your computer)
• Budgeting programs such as Quicken (Cost: You will shell out $40 for just the Starter Edition, $60 for the Deluxe and $90 for Premier
• Online budgeting programs such as mint or Mvelopes (cost: mint is "free" but look out for the safety risks. Mvelopes has a per month charge)

Do some research on the web to find out which category of budgeting tool is best to meet your needs. A good budgeting coach can also work with you to provide solid advice on what's best for your budgeting needs and match your skills to what's available on the market. Whatever programs and tools you select, remember it's all for naught if you don't alter your behavior. Motivation / Goals and Discipline will get you to your end goals.