Budgeting

Not knowing how to budget money is the cause for so many people and their family's falling in financial distress. In reality budgeting money is really a simple process that just about anyone, including kids, can learn. And the best part is once you learn to keep a budget it will always give you good control over your finances. If you don't learn proper budgeting one day you will wake up and wonder "where did all my money go?" The most important thing about tracking your cash flow is making the commitment to do it in the first place.

There are two sides to creating a working budget: expenses and income. Any money paid out for any product or service is considered an expense. These budget items can include rent, mortgage, utility bills, car payments, insurance, gasoline, groceries, and many other items. List out all your monthly expenses on your budgeting worksheet, using past months bills and your checkbook register to help remember what they are.

The fun side of the budget is the income column, because we all like to see how much money we make. All income streams need to be written on the worksheet and can include such things as salary from a job, hourly wages, investment income, child support, alimony, and anything else that pays you money. Add all the income side of the equation together and you'll have a good idea as to your monthly earnings.

Now you compare your income to your expenses and you have your first budget. If your income is more then what you spend you are in better financial shape then the vast majority of people. If it's the other way around and your expenses are more then your income don't despair, you're normal. The idea here is to see where you're making bad financial decisions and take control of your finances.

With your budget in front of you you can now see quite plainly what you spend your money on every month and start making decisions about what things to cut out completely or cut back on to try and end up with extra money at the end of the month. While doing this also pay attention to new items or services that may impact your budget. Nothing screws up a budget more than some sort of impulse buy that uses money designated for some other purpose.

This is where saving comes into play when budgeting money. You should save for any number of reasons, but probably the most important is to establish an emergency fund. An emergency fund allows you to forgo the use of borrowing money or using credit cards when a real emergency pops up. Something like unexpected medical bills or car repairs fall into this category. And unless it is a real emergency this money is to be left alone. For other big purchases establish a separate savings that allows you to pay cash for those big ticket items that you just can't live without. This is the key idea behind a successful budget to get out of debt; don't buy something if you can't afford to pay cash!

Taking the time to learn how to budget money is the failing point for many people. Unfortunately without successfully budgeting monthly income and expenses many people find them selves wondering why they can't pay their bills and never have any extra money. Don't be like everyone else; take charge of your finances starting today.