Budgeting

What is a family budget?

A family budget is a set of instructions or laid-out-in-advance procedures which act as a guide to paying your bills, buying things members of the family need, putting aside some money as savings, and so on and so forth. Nobody in your household should spend any money, outside of an absolute emergency, whenever doing so would cause the household to go over the family budget.

The family budget tells you your financial spending and consumption limits for a given period of time, usually for one month that based upon the following:

• Your household's total income,
• your debt load (including taxes),
• your regularly occurring expenses such as your electricity or phone bill the lifestyle you want to maintain or realize

All family budgets are intended to help you realize your goals and take care of all immediate needs, such as food, for yourself and your family while at the same time getting your household to make more money than it spends.

What makes a family budget successful?

The cornerstone of a successful family budget, or any budget, is by making sure that more money is brought in than goes out. You cannot realize your financial goals and lifestyle dreams if you and your family members are spending money that you don't have. If you are living in debt, you must assure that your household income is greater than your consumption expenses every week, month, or yearly quarter. The most important goal of creating the family budget is to get yourself out of debt, and to do so as fast as possible.

How does creating and then maintaining an effective family budget work?

It all begins with preparation and thinking ahead. The word economics literally means "household management" in its Greek root. Apart from making sure all the people in the house gets along decently, the financial part of household management is the most important part.

You should draw up a plan of expenditures and you must follow it. If you do it right, you should be able to maintain your current lifestyle, and have enough money for recreation and leisure (which are important to mental and emotional health). But, maintaining this budget could mean changing certain spending habits. If that's the case, you and all your family members who are working will need to comply with the family budget.

At least for most of us, money is limited. This means you need to prioritize how you spend your money. When most of your immediate needs are taken care of, your family budget will guide you to pay down your most pressing or outstanding debts first. For the vast majority of people, this will be their mortgage or credit card debt.

Pay Yourself First

Creating a family budget, however, also works on the principle of "paying yourself first". This means that you put aside as much money as your budget permits toward savings and investments. Your "investments" might be a money market account, CD at your bank, or it might be some stock investments made with the guidance of a financial professional. But at any rate, you must make sure that you take some of your income off the top before you get down to the business of paying the supermarket for your food and then paying the bank for your mortgage.

A Household Budgeting Tool that Works

United First Financial has a proprietary software program called the Money Merge Account This unique software is designed to help you calculate with pinpoint accuracy how to balance your household finances to achieve the maximum debt pay down per period while still meeting all of your household's financial dreams and goals. The Money Merge Account is an incredible tool that anyone serious about household budgeting should look into.

The typical American household budget percentage breakdown looks like the list below. For most of the categories a range is shown. A range makes more sense to help you see where your personal budget fits (or doesn't fit.) If your budget doesn't fit the typical American household budget, rejoice! The average American household budget is jacked up - we carry too much debt and we just don't save enough. We're so worried about our neighbor's new pool, our co-worker's new car and our friend's new designer shoes that we spend more than we earn to try and keep up. But take heart! Review the percentages below, compare your household budget and then read on to find out how you can move yourself into the elite minority of Americans who have mastered where their money goes.

Typical Household Budget Percentages

• 33-38% Housing (59%-66% of this is on shelter - mortgage interest, property taxes, repairs, and rent, and other items)
• 15-19% Transportation (up to half of this is vehicle purchase - 2 cars per household average)
• 13-14% Food Budget (55% at home, 45% away)
• 0-2% Alcohol
• 0-3% Tobacco and related products
• 0-2% Caffeine related products
• 4-5% On clothing and related services (drycleaning)
• 4.5 - 6% on out of pocket Health Care
• 9% Personal Insurance and Pensions (breakdown: 1% life and other personal insurance, 7.5% Social Security, .5% investment
• 5% Entertainment
• 2.5% Charitable Contributions
• 2% Reading and Education
• 1% Personal Care products and services
• 2% Miscellaneous
• 4% Credit Card, Consumer Loan Interest

If your budget closely matches the above, here's what you can do to fix that. Do these in order. Do not proceed to the next step until you've addressed the current step:

1. Stop using your @#!&*! credit cards!
2. Make a down and dirty budget right away! Don't worry about it being right at first...you can perfect it over time. Just do it!
3. Cut back on your easy to identify, frivolous spending habits (3 dollar lattes, magazines, 450 extra satellite channels, etc.) If you've got some expensive habits you've wanted to quit for some time, now's the time. For example, if you're a hard-drinkin', chain smokin', coffee drinkin' fool, you can reap a windfall of up to 7% or more of your income! Just cutting back to 2 drinks per day, only drinking coffee from home and quitting the cigarettes will net you a nice amount of extra cash and add years to your life! Refine your budget after eliminating what you can.
4. Reduce your 401K and other investment payments (if you have any) to the minimum allowable to keep your 401K and/or other investment accounts open. If your employer has a stock matching plan, keep that in addition to the minimum to keep your investments accounts open (but only up to the minimum you need to get all the matching money.) You're going to reap a whole lot more return on paying off your debts than you can ever hope to reasonably get from traditional investments. If you're paying into a college fund for your kids - keep doing that - if you're not and you really want to, hold off until step 6. Refine your budget to reflect the extra income available, if any.
5. Build an emergency fund equal to 2% of your gross annual income. It should be a little hard to get to (like a separate checking account or mutual fund), but not too difficult (Certificate of Deposit.) Work this into your budget - it's very important. You will not believe the amount of stress that will melt away when you do this.
6. Pay off your debts - everything except mortgages. And don't just move your revolving debt into a second or third mortgage - that's bad. Pay them off using a rapid debt paydown system. Pay off any student loans (for future reference, these are a bad idea.) Pay off your car(s) too. If you're not upside down on a car loan (your car is worth more than you owe) you can sell it and get a cheaper, paid for car. Throw a small (inexpensive but fun) party for yourself and your loved ones every time you pay off a debt.
7. Take all the money you WERE spending to pay off your non-mortgage debt and start putting it into those investment accounts you put on idle. Make sure you're investing at least 10% of your gross income. If you followed steps 1-4 exactly, you should have lots of breathing room in your budget now. If this is true and you want to invest more than 10%, go ahead, but be sure to reward yourself too and live a little. Grow your emergency fund to a level you're comfortable with (2 or more months of income is a good start.) If you have young kids and you want to send them to college, start putting money into a college fund of your choice for them, if you haven't already. Throw a bigger party than usual when this is done.
8. Pay off your mortgage and throw your biggest party yet! You can start towards this by refinancing to a single fixed rate mortgage (your credit should be in pretty good shape having paid off all your other debts.) If it's a 30 year mortgage, pay more than your monthly payment to dramatically lower the amount of interest you give to the bank. If it's a 15 year fixed - wow! That's excellent!
9. When you're totally debt free, regularly give away whatever you think you can afford. It's good for the soul!

Easy? Not. Worth it? Doing the above will pay dividends in your life in many more ways than just dollars and cents. You will assure yourself a dignified and financially secure retirement. Do this well and you will also build a way for your kids and your grandkids to enjoy prosperous lives, and they will remember you with fondness and respect long after you've moved on to the other side. Now get started!

Budgeting your finances can be rather difficult and frustrating at times, especially if you have a weakness with compulsive purchases - such as shopping for those new exciting hot items you desire. Realizing you need to set up a budget because you are spending too much is one of the first steps in making a financial change for the better. Many individuals don't come to the realization that they need to set up a budget until they are so deep in debt and are hurting financially to stay afloat. Don't worry if this describes you, I have been there and I pulled myself out. Don't let this situation catch you off guard - act now and recognize you need to be budgeting your finances in order to become financially fit.

After you have realized you need a budget, one of the first and most difficult steps of budgeting is setting up your budget. By setting up a budget and successfully implementing it, you will be able to see some options you can do with your money, such as growing your money (investing), savings, and identifying cost cutting opportunities within your budget. Also from carrying out a successful budget, you will recognize you are a happier person because the financial stress has lifted by tracking your money. And most of all you will be creating new financial disciplines that will last your entire life.

When setting up your budget you first need to gather and write down all your expenses. Write down every reoccurring bill that you have (i.e., rent, mortgage, car payment, insurance, utilities, etc.), and how much you spend on all the other areas in your life (i.e., groceries, eating out, and activities). You also want to write down how much you save each month within an emergency account and for retirement, so you can include them in your budget as expenses.

When you have your list of bills, their amounts, and when they are due - you need to decide how much you will need to set aside for each bill from your income each time you get paid. A little secret that I use is to divide up the amounts of your larger bills based on how many times you get paid each month - for example, let's say your rent was $800 per month and you get paid twice a month; you would set aside $400 from each paycheck so you don't get hit by $800 in one paycheck. When you implement this strategy you will notice that you will not be money poor during the paycheck when your rent is due.

The ultimate goal for your budget is to stay Just Below Budget, meaning not spend more than what you bring home (your income). Budgeting and spending money is a task of self-control every day. You will need to have the desire, dedication, determination, and most of all discipline to become a budgeting master of your money. Remember, if you aren't controlling your money, you are only harming your own financial situation and future.

There are many ways to track your budgeted finances - for example, you can use spreadsheets on your computer, plain paper to write out everything, transaction records, online software programs, and software you can download onto your computer, tablet, or smart phone. There is no right or wrong way to track your finances as long as it works for you and your situation. However, from my experience and millions of others, the budgeting software available today can save you countless hours of your time in helping you track your finances. Many of the software programs are able to sync with all of your bank accounts, retirement accounts, mortgages, loans, and credit cards to help track your finances. With some of the programs you are even able to enter your budgeted amounts to help you stay on track of being Just Below Budget.

With the tools available today, some basic guiding principles, and your determination and discipline, you too can have a successful budget that can lead you to a great financially fit life.

To learn more about me or my blog, and if you have any questions, please visit http://www.JustBelowBudget.com.

Sincerely,
Matt Fedderson

Government budgets represent between 25% and 50% of he Gross Domestic Product (GDP), depending on the country. The members of the European Union (Germany, France) and the Scandinavian countries represent the apex of this encroachment upon the national resources. Other countries (Great Britain, to name one) fare better. But even the more developed countries in South East Asia do not clear the 25% hurdle.

The government budget, therefore, is the single most important economic decision, the most crucial economic event every (fiscal) year.

The government finances its budget mainly by taxing individuals and corporations. Ultimately, households pay the bill. Even corporations are owned by individuals and earn their money by selling products and services to individuals. Higher taxes are likely to be passed on to customers or to employees. There are numerous kinds of taxes, regressive and progressive, direct and indirect, on earnings and on property - but they all serve to finance the budget.

Another method of financing the budget is by borrowing either in the capital markets (by selling bonds as the government of the USA does) - or by "voluntarily" deducting part of the wages (as Israel used to do until a decade ago). Such borrowing has grave repercussions: the national debt grows, debt service (repayments of interest on the debt plus the principal of the debt) consumes more and more of the national resources and the government crowds individuals and - more importantly - businesses out of the credit markets. In other words, the money that is lent to the government is not available to finance consumption, investments and working capital for businesses. The competition on the scarce resource of capital increases its price, interest rates. Government borrowing has disastrous economic consequences in the long term: reduced consumption, heightened interest rates, stagnant investments - all leading to recession and negative or reduced growth rates.

Recognizing these unfortunate results, governments the world over have been converted to the new religion of balanced budgets or, at least, reduced and controlled budget deficits.

The two best known examples are the United States and the European Union.

One of the things which used to distinguish between political camps in the USA - Democrats versus Republicans - was their attitude towards the role of government in the economy. The Democrats believed in an active government, whose role it is to ameliorate the excesses of the markets. This logically led to less hysteria over the size of budget deficits. The Republicans firmly believe in Bad Big Government and in the overriding necessity to constrain it and to abolish as many of its functions as politically and economically feasible. Small Government was a pillar of the treaty with the people which led the Republicans to their landslide Congressional victory in 1994.

It is an absurd that it was a Republican president (Reagan) who was responsible for the biggest increase in the national debt since the USA was established. He reduced the interference of government in economic life mainly by reducing taxes - without the commensurate slimming down of government itself. The result was apocalyptic: enormous twin deficits (budget and trade), a collapse in the exchange rates of the Dollar against all major currencies, recession and the steepest stock market crash in 1987.

Today, the USA owes 5 trillion USD. True, this is only 60% of the GNP - but this time statistics is misleading. The interest payments on this "benign" level of debt amount to 15% of the budget, or 250,000,000,000 USD per annum. This is more than any other expenditure item in the budget, barring defence. And it is getting worse.

This, however, belongs to the past. Clinton is as much a Republican as any and both parties share the conviction that the budget must be balanced by the beginning of the century. It seems that it is well on its way there. The projections of the objective and reliable Congressional Budget Office (CBO) are positive: the budget will be balance shortly, long before it was projected to do so.

But it was an American, Benjamin Franklin, who once (1789) said: "Only two things are certain in this world - death and taxes". This spectre of a balanced budget already provokes interest group to pressurize the administration to be less tight fisted and possessed more of a social conscience.

Nowhere was the new "less deficits" doctrine more apparent than in the Maastricht Treaty and, especially, in its criteria. The latter determine which of the member countries of the EU will join the Euro single currency zone in the first wave of entrants in 1999. One of the more important criteria is that the deficit in the government's budget will not exceed 3.0% of GDP ("three point zero" - emphasize the Germans who are very worried about the stability of the currency which will replace their treasured DM).

As a result of this rigid criterion, governments have increased taxes (France), imposed one time levies (Italy), engaged in creative accounting (again France with many others) or unsuccessfully tried to do so (the failed attempt to revalue the gold reserves in the coffers of the Bundesbank in Germany). Some were aided by buoyant economies (France), others by favourable public opinion (Italy), yet others by farsightedness (Germany's Kohl). All of them pay a dear economic, political and social price. By restraining the budget deficit, they induce recession or fail to encourage budding economic expansions. Unemployment rates remain stubbornly high, so do interest rates.

This is the price of adhering to an economic fad.

Balanced or low deficits budgets are a good things when the economy is roaring ahead. But there are certain things that only governments can do: defending the country, maintaining law and order, disaster relief, ensuring market competition. One of the more important functions of any administration is to act anti-cyclically, to encourage economic activity in times of recession - and to hold the economic horses when they go wild. A government cannot do this when its hands are tied behind its back by a totally arbitrary limitation: no more than 3% budget deficit (why 3? why not 2.65%?). This Maastricht criterion will prove, in the long run, to be lethal to the very idea of a European Union.

What is a budget?

It is a program. It charts the government's expenditures and allocates its resources for a period of one fiscal year. Some fiscal years start and end in January (Israel), others in October (the USA). But budgets always relate to fiscal years because of their dependence on tax revenues. Modern government budgets make a clear separation between current expenditures and the development elements. These were mixed in the past and this served to cloud issues and to disguise gross misuse of funds.

But this structural separation did not change anything basic. Budgets are statements, mainly of policy. The budget delineates clearly - and if it doesn't do so, it surrenders through careful reading and analysis - the political, economic and social priorities and goals of the government which prepared it. Politicians can talk a lot about the importance of this or that - but it is only when they put (other people's) money where their mouth is that an indisputable priority is established. Money talks (loudly) and the budget proclaims the true face of the government which conceived it.

In this sense, a budget is also a monitoring tool. By comparing financial projections, finances allocated to specific purposes in the budget - to the actual use made of the funds and to the extent that they were expended, it becomes clear whether the government "has kept its word", "changed its mind", or "reneged on its promises". A budget is a promise, it is a contract between the elected government and the nation, it is approved by parliament and has the status of a law. A budget can be altered only through a vote in parliament. It is a document of unparalleled importance, second only to the constitution.

Still, budgets (moreso than constitutions) are like living organisms:

As circumstances change, new priorities and emergencies alter the allocation of resources. The budget is based on economic projections and predictions, not all of them successful and come true.

This is why additional or supplementary budgets are introduced by governments during the fiscal year. These are updated versions of the original budget. They reflect the changed reality better than the outdated original. They help to redefine national priorities, reallocate resources, modify national spending.

These budgets usually include tax increases, new economic or social programs, or additional specific expenditures. In some countries, the legislator must show where will money be found to finance the newfound enthusiasm embedded in the new expenditure items.

Budgets are also influenced by exogenic factors, not controlled by the government. Force Majeure cases, like the floods in the Czech Republic (3 billion USD) and in Poland (2 billion USD). Geopolitical processes like wars and peace agreements in the Middle East (the 1979 peace cost Israel almost 4 billion USD to implement). The onerous, depressingly uniform demands of the IMF from poor countries: austerity, fiscal tightening, a monetary squeeze, privatization, deregulation and so on.

Some countries are voluntarily subject to externalities: the EU countries agreed to amend their budget in order to comply with the Maastricht criteria. The French and German Premiers appointed special committees to review the budget. The reports submitted by these committees forced the governments to cut spending, increase taxes and tighten the fiscal discipline (never mind that the French committee failed to take into account the renaissance of the French economy and greatly exaggerated the projected budget deficit). In all these cases an act of rebalancing the budget is called for.

The USA has a peculiar budgetary procedure. Its Federal budget is made up of 13 separate bills. They are submitted to Congress for approval by the administration. When the President and Congress disagree, some of the bills are not approved and certain government operations are shut down. This happened in the 1996 fiscal year. In fact, the budget for fiscal year 1996 has been approved only after the 1997 budget was.

In the case of such a deadlock, stop gap budgets are passed by Congress to allow the government to continue to function until a final budget is positively voted on.

Budget are acts of humans. They represent hard data implausibly coupled with aspirations, projections, goals and hopes. They are prone to mistakes, greed, cronyism, ulterior motives. The existence of a mechanism to amend budgets is, therefore, of the essence and to be greeted. A budget amendment is often ceased upon by the opposition as proof of the government's fallibility and failure. But in a changing world - they who do not adapt through change are doomed. Governments that amend their budgets midway merely admit that they are made of humans and are doing their nation a service.

You've analyzed your past expenses, put them into spreadsheets, loaded Quicken with all of your data and come up with a budget. Now what? The tough part! You actually have to stick to your budget and put your plans into action. This is easier said than done. In many cases you will have forgotten about your budget and your financial goals 6 months or a year down the road. How do you keep this from happening to you?

Here's how. Make sure you follow some of these tips below so this doesn't happen to you.

1. Create a budget with realistic targets - Let's say one of your budget goals is to not eat out for lunch or dinner on a regular basis. If you are honest with yourself you may find this to be an unrealistic goal. Sometimes it's a nice break to eat out and have a relaxing rewarding evening. In other words, don't set the bar too high. Drastic and unrealistic goals are one of the surefire ways your budget will not succeed.

2. Budget for expenses that don't occur on a routine basis - Make sure you give consideration to expenses that occur once a year, such as holiday presents, birthdays, vacations, weddings, car maintenance costs, etc. These expenses don't occur every month and they will bust your budget plans wide open. Make a list of these events on a calendar and put a dollar figure to them. Place them in the month they are expected to occur so you can plan in advance how you will pay for them. The regular routine expenses are not the reason your budget will fail. It is these "gotchas" that will wreck havoc on your budget if you don't plan for them.

3. Put your budget in writing - Take the time to write down your budget plans. Making a mental note of your budget goals is a recipe for failure. Don't assume that your financial future will take care of itself by making a simple mental note to yourself. If you have your budget goals detailed in writing you can review and remind yourself weekly and monthly of your financial goals.

4. If you have a bad month or week, don't give up! - Let's say you have been reaching your budget goals for three months. In the fourth month, for whatever reason, you didn't reach your budget goals. Maybe you even stopped trying to stick to your budget! If this happens, don't just throw your hands up in the air and admit to failure. Everyone falls off the wagon sometimes. Your budget is a journey. There will be bumps in the road, so the key is to realize that everyone makes mistakes. This relates to a story I like about a great old time golfer named Walter Hagen. Before each round of golf, he told himself that he would have 4 or 5 bad shots. During the golf round, if he hit his ball into a bunker, he would tell himself, "There is one of my bad shots that I was expecting", hit the ball out of the bunker and move on. It didn't phase him one bit because he had knew there would be some bad shots in his round.

5. Adjust your budget over time - This one is a biggie! It can take months or even years to fine tune a personal budget. When you initially made your budget plans, you probably had to guess at some of your figures. They might not have been in touch with the realities of every day life. For example, you may have underestimated your monthly grocery or utility bills. If this happens, analyze all of the underlying money that was spend in this category to see if your initial estimate was unrealistic. If it was, try to come up with a more accurate number and then to stick to that new figure. It is this type of adjustment that is one of the keys to making sure you can stick to your budget.

6. Review your budget every month - This is where you will make any adjustments that are needed. Set aside the first day of each new month to review your income and expenditures and match them to your budget goals. By actively reviewing your finances and comparing it to your budget, you can adjust your spending habits. This gives you a chance to analyze areas that exceeded your budget expectations and make the adjustments in your spending habits or your budget. The goal here is to not forget about your budget. One tip that has worked for me is to put a printout of my basic budget goals on the refrigerator. That way every day, several times a day, I would notice my budget goals sheet. I may not read it every time, but I notice it and it reminds me that I need to stick to my budget. That is why tip number 3 is so important.

7. Set specific short-term goals - Let's say one of your budget goals is to have all of your credit card bills paid off in two years. If your credit card balances total $20,000 that would be $10,000 a year. Divide that number further into quarterly reductions in your credit card bills, in this case $2,500 every 3 months. Now, this is a more tangible budget goal to shoot for isn't it? I find that when I divide intermediate and long term goals into short-term tangible stepping stones, I am able to feel a greater sense of accomplishment and am more likely to succeed. This brings us to number seven...

8. Reward yourself - That's right! Treat yourself when you reach your some of your short-term goals. Since your financial budget is really a journey, take some time to smell the roses on your way. Sticking to your budget should not be a restrictive, unpleasant experience. Not only should you take the time to enjoy your financial accomplishments along the way, but use part of your budget for fun things that you enjoy. Just make sure your rewards don't end up breaking your budget!

9. Pay yourself first - I'm sure that one of your budget goals is to save and invest a portion of your income. One of the keys to make sure you succeed at this is to do what the IRS does with your paycheck, take it out of your discretionary income immediately. This way, the money is saved away right off the bat. Move the money immediately into a savings or mutual fund account. Many mutual fund companies can setup automatic deductions from your paycheck. Despite your best intentions to save, the hectic, daily demands of life can reduce the amount you are able to save.

10. Attitude is everything - When most people think of a budget, they picture restrictions and pain. Almost like a diet. You know what happens with most diets? They don't seem work for long! First, if your budget is too strict, too restrictive on your spending, it won't work either. However, you will need to limit your spending in some areas and this will take some adjustment in your attitude. I found that when I am feeling limited and sorry for myself when I can't purchase something that I want, I remember my financial goals I set with my budget. I think about the satisfaction I feel when I reach those goals. Over time, you find that you don't want to disappoint yourself by breaking your spending goals on a spur of the moment purchase. Now, I actually get more pleasure knowing that I am reaching my budget goals when the thought of an impulse purchase crosses my mind.

If you follow these tips, your budget plans are more likely to be a great success. By taking some simple steps you will find that living within a budget is not as tough as you imagined. It can actually be fun and rewarding!

If you think about it, it doesn't really take much reason to practice proper financial management. Instead of asking why you need to do so, the correct question is, why not?

Financial management will change how you live your life and will help you achieve financial freedom. Once you know where your money is actually going, you will unconsciously strive to make changes to make sure that it goes to where you want them to. But the important thing here is to come up with a way to know how you will monitor all your finances.

This is where budgeting comes in.

Some people fail at financial management because they refuse to live with a budget. The most prominent reason that discourages people is the fact that budgeting seems like too much of a chore to do. While knowing all the details and tracking your expenses are important in budgeting, there are systems that will make it easier for you.

You have to remember that budgeting has to be done correctly for it to work and be implemented. You need to select a system that you know will work for you and will encourage you to follow. A budget that is not implemented correctly is for nothing. To help, here are some of the budgeting systems that you can choose from.

Online Budgeting. There are both paid and free online systems that you can use to make your budget available anytime. As long as there is an Internet connection, you can access your budget and make changes as you see fit. All you have to do is to choose a reliable online budget system that will download your financial transactions from banks and categorize them for you. This way, you don't have to do the encoding yourself. The drawback here is it may not be able to track specific cash purchases - maybe just the overall cash withdrawal. Not only that, the system may put certain transactions in the wrong category so you still need to double check to balance your books.

Personal Computer and Mobile App Budgeting. This budgeting system is a software that you can download in your personal computer and also your mobile. It allows easy management of your accounts but it is not as automatic as the previous option in terms of getting transactions from your bank. Although this is compensated by the fact that it can be synced as a mobile application so you can update it on your mobile. Then you can manually sync it to the computer when you get home.

Envelope Budgeting. This type of system involves paying for everything in cash. You make one detailed budget, get the total amount and literally put the cash in labelled envelopes. You then make sure that you do not spend more than the cash that is placed in that envelope. It is a simple and easy way of sticking to you budget - although it may not be appealing to people who dislike carrying around money.

Traditional Paper Budgeting. Of course, the traditional pen and paper budgeting is the oldest form that still remains effective. However, it is the tedious of all these systems. You can put everything in a small notebook to help you monitor all your expenses.

Choose the type of system that you know you can stick to. You can combine two systems or change them if you feel like it. The important thing is to start living on a budget so you can practice proper financial management as soon as possible.

The topic for this article is Personal Finance Budgeting. The first step in becoming financially responsible is starting out with a personal financial budget. Absent a budget there is no way one can possibly track their income and expenses.

Before getting into what personal budgeting finances are I want to explain why budgeting is important. For this idea we will say that you have decide to startup a business, a personal financial advising firm. When establishing your financial advising firm the first thing to be done is the planning out of your company expenses. Most people would logically budget for their expenses before they began because without this financial planning you would have no idea of whether or not your financial advising firm could potentially be profitable. The next thing is to plan out your revenues. Then you would take the difference between the two and see whether things looked good or not.

This is what a financial budget is for a company and people should handle their personal finances in the same manner. When establishing a personal financial budget it is important to include everything that involves your money.

You can find personal finance software on the internet. This software is made so that you can easily enter all your income and expenses and it does everything else for you.

The components in a personal financial budget include both income and expenses. Examples of income in a personal finance budget include job income, gambling winnings, capital gains, social security, tax refund, etc... Examples of expenses in a personal budget worksheet include SAVINGS, electric bill, health insurance, cell phone, groceries, books, shoes, clothes, car insurance, gas, entertainment, travel, miscellaneous, etc.

This expense list does not include all potential expense, I'm sure you can think of others right now. Anything possible thing that you can think of that you might need to spend money on should be put on your personal budgeting worksheet.

I know that some of you are thinking to yourselves "Savings? What? Thats not an expense!" Well I'm here to tell you that savings should indeed be thought of as an expense. Each month one should personally budget for a certain amount of their money to be saved. This should not be an "if I have money left over" situation. It should be definite and as automatic as writing that check for your mortgage every month.

The most basic concept of personal budgeting is to control spending and use your money wisely so that you have money left over rather than having no money or going into debt.

After listing your income and expense on your budget worksheet you need to subtract the expenses from your income and get a Net Cash Flow for the month. The idea is to include all income and costs and come out with a positive cash flow on your personal financial worksheet. If the number comes out negative then you have a problem and your expenses will need to lowered.

Now you know exactly what a budget is and how to make one. The next thing to is run a few Google searches an find a budget template to make things easier.

You need to keep a budget every month. No, you cannot simply make one plan for the whole year and stuff it away somewhere to forget about it. Our income levels change and our expenses change and these changes need to be accounted for.

To be successful with your personal budgeting plan you need to make out a projected personal budgeting plan for the whole year. Then as each month passes you can make monthly adjustments.

The other thing to do is keep a record of your actual income and expenses and compare that to your personal financial budgeting worksheet. You want to make sure that your original estimates were correct or at least close.

The thing about a personal financial budget is that it sets you up for success and helps keep you from needing to use credit cards or other debt to make it.

If you have an accurate personal financial budget then you will be prepared for the unexpected financial burdens that happen from time to time.

There should be no issues when your car breaks down and you suddenly need $300 to fix it. All is good because you have been putting money into savings each month.

This is the most basic idea of personal financial freedom and personal finance budgeting. If you can establish a sufficient level of savings then you can begin to be at ease with your financial situation.

Most people are clueless and don't realize that their unplanned/unwritten actual personal finance budget includes something like $4500 of income and $4700 of expenses each month.

Next time I will take a short break from the Mini Series and instead suggest a few personal financial budgeting software programs that are available out there.

There has been a significant amount of talk recently about household debt, house prices, the ability to make mortgage repayments, the ever increasing ability of Australian consumers to keep spending.

On the 30th of March, http://www.theage.com.au ran an article stating that Australians borrowed at such a fast rate and that another interest rate rise was therefore inevitable. Data from the Reserve Bank of Australia (RBA) showed that total credit provided to the private sector by financial institutions rose by 1.4 per cent in February.

Increasing interest rates, higher petrol prices and a fall in housing prices has lead to a doubling of households struggling to meet mortgage payments. This further indicates the importance of completing a budget. If you are struggling to make mortgage repayments in a time of increasing costs, you ready need to manage how you spend your disposal income to ensure you stay in control of your finances and make your mortgage repayments on time in full.

People do not know how much they are spending until they really know how much they are spending.

What do I mean by this? Well people think they know where their money goes each pay period but when pay day comes around and they're regularly struggling, then it's obvious that they don't know where they are spending their money. The only way to truly stay in control of your finances is to ensure you regularly budget.

Understanding how much you are spending and where you are spending your money is the first step to being able to save money. By regularly completing a budget you regularly understand where and how you plan to spend your money over the coming period. That way you can determine which areas of your spending can be better managed i.e. where you can save money.

If you can save money by budgeting, it means you can reduce your debt quicker and stay on top of mortgage repayments. Here's an example of what I mean:

Loan amount $300,000

Interest rate 7.99%

Loan term 25 years

Weekly minimum repayment $533

Total interest payable over 25 years $394,038

The table below indicates the time and interest saved by increasing the weekly mortgage repayments by $20, $50 and $100.

Increase weekly repayments by $20, Time saved 2 years, 6 months, Interest saved $48,565

Increase weekly repayments by $50, Time saved 5 years, 5 months, Interest saved $100,307

Increase weekly repayments by $100, Time saved 8 years, 8 months, Interest saved $156,782

The table above proves that small savings per week applied against your mortgage can make a big difference to your ability to do what all Australians want to do, pay off their mortgage as quickly as possible.

This is all well and good, speaking about understanding your spending, increasing your savings, paying off your mortgage sooner etc but what if you have never prepared a budget before and don't know where to start? http://www.easy-budgeting.com can help.

http://www.easy-budgeting.com has made the process of budgeting easy and possible for everyone. The web site offers a simple and easy to use 12 month budget model created in Microsoft Excel. You don't need to be a computer wizard or an Excel expert, you just need to have the desire to control your finances.

The main feature of the 12 month budget model provided by http://www.easy-budgeting.com is the ability of the user to budget an income or expense item by completing just 3 easy steps. The user simply selects the start month, the frequency and the amount of the income and/or expense and the data for the 12 months is automatically generated based on the parameters selected.

Once you complete the 12 month budget, you may be surprised to see how much you spend each month and where you are spending you money and possibly how little you are saving.

Budgeting is a process which helps you control your finances so remember it is very important to make sure you are honest with yourself when you complete the budget process. Really think about how you spend your money and make sure you include all regular expenditure, no matter how small you think it is.

Here's another example:

Daily lunch spend $10

Days per week 5

Work weeks per year 48

Annual spend on lunch at work $2,400

You buy a sandwich and a drink for lunch every day you go to work and next thing you know, you've spent $2,400 per year on eating lunch. You wouldn't know about this spending unless you completed the budget process honestly and accurately.

Visit http://www.easy-budgeting.com for more information on the 12 month budget model.

Starting a family can be one of the most emotionally and fiscally draining expeditions that most individuals will take. Emotionally, people must deal with the psychological effects of raising children including lost sleep as well as other emotional drains involved with nurturing kids. Financially, however, a whole slew of unexpected expenses will come with the birth of a newborn child. From healthcare bills to diapers to baby formula, raising a child will involve a tremendous level of financial commitment that a large number of parents don't even consider. It's important then, that you have a solid budget that can help guide you to save money and prepare for the unexpected. If you're in this situation, or if you already have a booming family, you can't afford to be without a family budget software program any longer.

So how exactly does one create a budget? There are many ways, but the best, fastest, and easiest way to make a budget is to buy a good family budget software program. A large number of families fail to make a budget simply because they feel that the concept of budgeting is too hard, however, this could be further from the truth with good software. Creating a budget is literally as simple as entering in your projected expenses and income, and letting the software do the rest. Typically, these applications include tools to help you visualize your income relative to your expenses. Are you earning more than you're spending? How quickly will it be until you reach your saving goals? These are questions that are much more easy to answer after you enter your data into a good application, and the results are much easier to understand than using a typical spreadsheet!

In addition, family budget software can sometimes make recommendations on how to achieve short-term or long-term budget goals. Examples of these goals include having a six month "rainy day fund", saving for a family vacations, and so forth. Budgeting software can help you understand how long it will take to reach these goals and the companies often provide tutorials and helpful information to help you learn the best locations to allocate your money. Usually it is helpful to pay down debt, however, there may be a situation where it is better to accumulate savings in lieu of reducing your debt. Good family budget software will help you learn when to make these right decisions to secure your family's financial security. There is one program that emphasizes not spending more than what you earned in the previous month, and also to put every dollar to work in some capacity. This makes a lot of sense and it is no wonder why this program has become so popular.

All in all, it's not hard to see why you need to buy family budget software whether you're just starting a family or already have children. Navigating the financial waters while raising children can be one of the most treacherous exercises that one can take. Indeed, it also has implications of the highest importance - too many wrong decisions can place your family in a very precarious monetary position. Putting all of your income and expenses in a software application will let you take a good, hard look at how to optimize the use of your money so that you'll have enough to pay for the future expenses, such as college tuition.

Living within your means is one of the best ways to achieve security. Someone once said that there are two ways to be happy:

1. To get everything that you want in life. This is how most people attempt to be happy.
2. To want everything that you have in life. This is a much simpler means of achieving happiness.

As a Christian, pastor, and counselor, I've discovered that many of the unhappy people out there are only so largely because they attempted to live outside their means and it came back to haunt them.

A budget will solve this problem for you. It will give you stability, security, and freedom. I make what is considered to be poverty wages by the government. Yet I own both my vehicles, and everything in my house is paid off. I have money stashed away for a rainy day, and investments. Only the house itself am I still paying on. Trust me; there is no feeling like not having to worry about money.

The average person considers what I make to be insufficient to maintain their lifestyle. So how do I do it? A budget.

Here are some of the benefits of having and living by a budget:

1. Financial Security. A budget allows you to free yourself from the worry of paying a particular bill. I don't worry about credit card payments, mortgage payments, or anything. My budget takes care of all that.
2. Know what you can spend. Most people hope they'll have enough money to buy something. If not, it goes on a credit card and they'll end up paying interest. With a budget, you know exactly how much you can spend.
3. Know what is affordable. Similar to the last, point with one distinction. You'll be able to make decisions about the future easier knowing exactly what you can and cannot afford.
4. Build your credit hassle free. Credit is ruined when you can't make the payments. With a budget, you don't have that problem. You'll know what you can and cannot afford.
5. Get your priorities right. Money should not be the main priority in a relationship. But when money is mishandled, it becomes consuming and overwhelming. It becomes priority. But with a budget, you'll be able to focus on your marriage, your children, and your other relationships without the worry of money issues or pressure.
6. Prepare for the future. Everyone ought to be setting some money aside for the future. Retirement or that rainy day will come. You need to be ready. But how much can you set aside if you don't know what your financial state is in? A budget will solve that problem.
7. Pay off debt faster. Debt can become like a black hole. Unless you can get rid of it, it grows and just consumes everything you throw at it. With a budget, you'll be able to plan a strategy to pay off debt.
8. Know what needs to be cut. With a budget you'll see more clearly what you need to cut out of your budget to meet your needs. Without that budget, you'll live in a realm of hopeful anxiety that somehow, someway, it'll all get paid. That's not a very good strategy.
9. Do more for your family. There isn't a mother, father, wife, or husband who doesn't want to do more for his family. But just throwing money around that you don't have or that you can't afford is destructive. With a budget, you'll know what you can do, plan for things easier, and in the long run, do a lot more for them.

Let me illustrate all of this a bit better. Years ago, I decided our family needed another vehicle. I first looked at my budget, tweaked some of the numbers, and figured out exactly what I could and could not afford for a payment. I went to the dealership, found a car I liked, and basically told them that I could afford a $120.00 a month payment. They came back and told me, proudly, that my car payment would be $320.00 a month. I got up to leave.

The salesman said, "Wait. Where are you going?"

"I told you that I can only afford $120.00 a month. If you can't get it down that far, we have no deal," I replied.

Well they worked the numbers, reworked the numbers, fiddled with the price, talked to management, and eventually came up with a payment of $119.00 a month. Now a lot of that had to do with my high credit score-which is something that I also attribute to my budget.

These are just a few of the benefits of having a budget. Once you get one, stick to it. Don't vary from it, and follow it religiously.

What Is A Budget Simply put, a budget is a spending plan. It details how much you earn, how much you spend, and how much is left over. If you have any money left over, then you have a budget surplus. If you don't, you have a budget deficit. If you happen to fall into the budget deficit category, then you have to cut non-essential purchases completely out of your budget. Generally, living and leisure expenses can be modified slightly to fix the problem.

Why Start A Budget

Statistics show that the average American spends 10% more than they earn. This means that if you have an annual household income of $50,000, then on average you would be spending $5000 more than you earn. The only way to combat this cycle of overspending is by establishing a realistic household budget and stick to it.

What Are The Benefits of Budget

Maintaining a budget allows both individuals and families to become debt free, save money, track spending patterns, and achieve financial goals. Whether you are looking to pay for your next car in cash or funding your child's college education, establishing a budget is a sure way of doing it.

Why Some People Fail at Budgeting

Many people fail to live within their budget when they feel that it is too restrictive or too difficult to manage. Therefore, it is a good idea to allow room for leisure entertainment and some discretionary spending. This way, you stick with your budget and it becomes a habit without feeling miserly.

How To Start A Budget

Follow these quick and easy steps and you are well on your way to becoming a master at budgeting.
1. Set your goals. Why do you need to budget? Saving for a new car, vacation, or nest egg?

2. Determine your cash flow. How much is coming in every week, month, year? Write it down, or enter your information into a budgeting software program, such as Budget Forecaster by Strativia.

3. Determine your expenses. Where is your money going? Again, write it down.

4. What the verdict? Do you have a budget surplus or budget deficit?

5. Maintain or modify your plan. Depending on your results, you should either stay the course,
or change your course to achieve your financial goals.

There you have, Budgeting 101. It's not hard. The difficult part of budgeting is actually starting and sticking to it. If you start today, you will be financially free tomorrow.

Budgeting, whether for the home or the business, is a management tool for dealing with the future. It helps you turn expectations into reality. More often than not, homeowners, and businesses, don't prepare an annual budget; and often wonder why reality does not meet their expectations.

As homeowners and businesses work into a new year, a review of budgets and budgeting is appropriate. Let's illustrate some of the basic principles of budgeting for the small business.

My Teaching Lesson

Some years ago when I was instructing a group of graduate students in the foundations of financial administration (yes, it did seem boring to some), several students approached me and wondered when I was going to teach them "Budgeting 101." How did they get this far in life, I wondered, without knowing how to budget?

We took several lunch hours over the blackboard (yes, they were still in use then) to develop a real budget. So I asked them some very sophisticated questions - Do you have a checking account, a savings account? What do you use your checking account for - daily, weekly, monthly expenses and bills. What do you use your savings account for - major house repairs, major purchases, and, oh yes, saving for the future.

It did not take long for my charges to get the message - add up all your weekly expenses, month by month for the past year. You will see a pattern of expenses - cable bill, electric, gas/oil, water/sewer - your utilities, groceries, clothing, supplies, insurances, etc.

Now that you know what you have spent on regular, recurring items, when do your "discretionary" expenses occur? Why do you decide to purchase them? How are they related to your family needs, your lifestyle needs, and your "splurge" needs?

Once you can answer these questions, you know several things - how much you need in "take-home pay" to pay for these expenses on a monthly basis, as well as the motivations behind your spending patterns. You may also then have the ability to make some choices on those discretionary items (change your priorities), or lower the thermostat, water the lawn less, or become more of a coupon shopper.

And if you can lower your payments and/or increase your take home pay, you can leave more in the bank!

One of my students acknowledged he finally understood all about budgeting! And I did not even relate it to business. Oh well, perhaps in retrospect the class was boring.

For business, budgeting is not very different. As businesses begin to wind down their fiscal year, their first consideration for the next year should be about the prospect of increasing their profit for their business. Working up a budget helps them to determine whether their profit goal is within reach.

First Steps - Collecting Data

So, let's get started. Collect all your fixed costs and your variable costs for the past year.

Regardless of sales, fixed costs stay the same. Several examples of fixed expenses are insurance, rent, taxes on property, wages paid to salaried employees, depreciation of equipment, interest on borrowed money, building maintenance costs, office salaries, and office expenses.

Variable costs vary with sales. In some businesses, the cost of labor is the biggest factor. Sales commissions, payroll taxes, insurance, advertising, and delivery expenses are other examples of variable expenses.

Break them out and organize them on a monthly basis - November through October. Next, we will look at how these fixed and variable costs can create a budget, and, more importantly, lead to the creation of a more profitable business.

Analyzing Your Data, Making Some Assumptions

In the last step we asked business owners to pull together a full year's fixed and variable costs/expenses so that we could begin to create budget and create a more profitable business. From these three figures - profit, fixed expenses, and variable expenses - you can determine your "hoped for" total income.

When the figures are all together, you have answers to questions such as: What sales will I need to achieve the desired profit? What fixed expenses will be necessary to support these sales? What variable expense will be incurred in producing the product or services?

Because business is not a cut-and-dried affair, the first budget often will uncover issues and suggest choices to you. Working up alternative budgets will help you decide what changes you will need to consider in order to have a workable plan for next year.

Many owners run their businesses without a planned goal. In trying to survive from week to week and from month to month, owners overlook an important management tool - budgeting. Whether the plan is for next year, for the next 3 years, or for the next 5 years, budgeting can help you just as a map helps you to keep on the right road.

A budget in its simplest form is a plan that enables you to set a goal and list the steps that are necessary to reach that goal. A budget helps you think about what you want your business to do in the future (remember our discussion about making choices, and setting or changing your priorities?) By planning, you are in a better position to act to prevent problems from developing.

A budget is a detailed plan of future receipts and expenditures - a projected profit and loss statement. Once the period for which you have budgeted is completed, you can compare actual results with anticipated goals. If some of your expenses, for example, are higher than you expected, you can start looking for ways to reduce them. Conversely, if you have fallen short of your goal, you may want to look for ways to increase your income.

You can start either with a forecast of sales and work down, or with a forecast of profits and work up. Most businesses use the latter method. In other words, you decide what profit you want to make and then list the expenses that you will incur in order to make that predetermined profit. You will need to realistically ask the question - Can I achieve this goal and how?

Before you can use a budget as a plan for increased profit, you have to be sure that your present profit is what it should be. In a business, the year-end profit should be large enough to make a return on your investment and a return on your own work-pay. This may seem difficult to determine, but if you have collected your expense data, you are well on your way to identifying this.

For those business owners who are skilled crafts people - you are kidding yourself if your companies' profits are less than what you could earn working for someone else. Your net profit after taxes should be at least as much as you can earn if you worked at your trade for a weekly paycheck.

So, after you review your fixed and variable expenses, prepare your forecast for next year - a forecast of sales or a forecast of profit. Spend some time preparing your assumptions (forecast). And write them down. Now, let's pull this information together.

The Final Step

In the last two segments we asked readers and business owners to begin the necessary steps to preparing an annual business budget. Now we will tie it all together.

By now, you should have collected and analyzed your fixed and variable expenses and prepared a profit forecast - either based on sales or on profit.

Your year-end profit will be too low if it does not also include a return on your investment. That investment includes the money you put into the company when you started it and the profit of prior years that you left in the company - often called retained earnings.

After you know what you made last year, you can set a profit goal for next year. Be sure that your goal includes a return on your services and a return on your investment.

Once you have decided on your profit target, the next step in preparing a budget is to determine whether you can achieve this. To do this, you need to project your fixed expenses and your variable expenses. From these three figures - profit, fixed expenses, and variable expenses - you can determine your "hoped for" total income.

In reviewing the data collected, keep in mind that without accurate information, planning becomes guessing. If you have never budgeted before, you may benefit from a blackboard session on "Budgeting 101," and a review of your record keeping system. Changes in your record keeping system may be needed to provide the necessary budget information. It may be that your present accounting software or system does not break costs down into fixed and variable expenses, or it may be that you need to have a profit and loss (or income) statement at more frequent intervals to determine the seasonal fluctuations of your revenues and expenses.

Let's assume however, that you have the ability to conduct a good analysis. Your expected income contribution is the difference between sales and the variable expenses that are necessary to produce these sales. When this difference equals fixed expenses and the desired profit, you have a workable budget.

Your developed budget provides you a tool for control. You start building this control tool when your budget for 12 months is completed. Break your budget down into fiscal quarters. This type of breakdown allows you to check for any discrepancies that may not show up readily in a 12-month budget. When many items are added together, it is easy for an error to creep into the totals.

During the year, this quarterly division provides a handle for managing expenses and other activities and also helps you to understand expense and income variations.

For example, by looking at next quarter's budget you can anticipate peak periods and schedule stock and labor to handle peak sales volume. You can plan vacations, special promotions, and inventory taking for the slow periods.

A monthly or quarterly profit and loss statement allows you to keep the items in your budget in line with operations. Then compare the actual and the planned revenues and expenses on the income statement.

Once you run through this process several times, you will be better able to pinpoint and work on the problems that have occurred during the month or the quarter. Your objective is to guide your activities toward the most profitable type of operations.

Successful businesses make budgeting a regular habit. The more regular the habit, the more successful you r business will be. Happy budgeting!

You definitely need to have a comprehensive, realistic budget. It's a critical component of your nonprofit's annual marketing and communications plan and, like the work plan, serves as a map to ensure you reach your goals. The budgeting process helps you to determine whether your plan is realistic. If not, you know you have to cut the plan to focus on ultimate priorities and retool the budget.

But, it's always a challenge to determine your nonprofit marketing and communications budget, and to justify it to the powers that be. On popular approach is to allocate a certain percentage of the organization's budget to marketing.

In the for-profit world, it's fairly standard to determine a marketing budget by allocating 10-20% of projected gross revenues to marketing and communications. However, things aren't so black and white in the nonprofit world with our dual bottom line of people and dollars. You can take the percentage approach OR the flat dollar approach.

What's most important is that you establish a detailed marketing and communications budget prior to the start of each fiscal year, and track costs (by strategy and program or project) and results AS YOU GO so that you can analyze cost vs. benefit. The budget should be integrated into your annual marketing and communications plan, with a dollar cost allotted to each strategy (direct mail, email, paid advertising, media relations, etc.) and program or project, each of which should be broken out by its various components (consulting, evaluation, printing, postage, etc.).

Each organization's plan (and budget) will cover a unique set of components. Don't forget to budget for the tasks - such as researching your audiences and evaluating outcomes - that give you the information to make your selected strategies as successful as possible.

The Percentage Approach

This approach is favored by those who believe that marketing and communications expenditures should directly reflect a nonprofit's evolution and the size of its budget. Personally, this is the approach I prefer. The advantage of developing a budget based on your organizational finances is that it's organic. Communications spending grows as does your organization. Of course exceptions are made for special needs such as the launch of a new program, introducing new leadership, or tackling an urgent advocacy campaign.

The average allocation is from 9-12% of your annual organizational budget (start with 10%). Advocacy organizations tend to allocate a higher percentage (12% or higher) of their organizational budgets to communications, since much of their advocacy work is communications based.

Here's a highly-simplified example of a budget shaped by the percentage approach:

2% Purchasing all advertising and promotion media, including newspaper, radio, TV, and direct mail (postage).

+

4% Producing (design, artwork) and printing all communications. This includes newsletters, brochures, web sites, press kits, etc.

+

1.5% Producing special events.

+

3.5% Salaries, consultants and freelancers.

= 11% Total percentage of the organizational budget going to marketing and communications.

The Dollar Approach

Others in the field consider a flat dollar approach to be more relevant (and safer) than the percentage approach since your total budget has to cover utilities, rent, taxes, health insurance, etc.

Defining the dollar figure is challenging the first time round but becomes much easier once you have records of several years' marketing expenditures to work from. Start out with a quick-and-dirty calculation based on last year's costs and revise it to reflect special campaigns, inflation, etc. Or, if this is your first year out, estimate the costs of what you think you'll be doing based on what you know today. Contact colleagues in the field and prospective vendors to get your projections as accurate as possible. Either way, you'll end up with a baseline budget.

Frankly, I've heard a lot about this method as a viable alternative to the percentage approach, but have never seen it put into practice.

What Budgeting Does for You

Whichever approach you take, you'll find that a formal budget is a great aid in decision making. To begin with, your marketing communications budget (and plan) will help you distinguish between needs and wants. You'll see clearly how much you have to spend to reach your goals and, via tracking results, will gain a sense of what strategies work best to achieve which goals. For example, based on your budget framework, you may decide to promote your advocacy campaigns via direct mail and email, media relations, and paid advertising in order to match legislative timeframes. However, you may decide to hold off on enhancing your already strong membership campaign with the launch of a members-only web site.

So start your budget process today, even if you're in the middle of your fiscal year. Make sure that you track costs by category and maintain a spreadsheet of actual vs. projected expenses. By next year, you'll have an accurate map of expenditures that will serve as a great foundation for next year's planning process and a sure means of ensuring you make the most of your marketing and communications budget.

Do keep in mind that your budget will have to be adjusted each year to reflect increasing costs and changes in your organization. For example, launching a new program requires an increased marketing budget for the first year or two so you'll need more dollars or do less on other fronts.

I used to work at Triple A in their road service division. One of the responsibilities I had was to ensure that our members were receiving the free maps they requested. Members could request any number of maps. Triple A maps were always the best in my opinion. They were very thorough and reprinted often in order to keep up with the road changes. As you can imagine during the summer vacation months the requests for maps were at a peak. Triple A is kind enough to its members to provide more than just maps. They provide "triptiks". These are custom made guides that direct members around road construction and other travel obstacles as well as provide helpful travel advice. It comes in a bound paper format that allows you to flip pages to more directions as you make progress in your trip. Between the maps and the triptiks Triple A members who are traveling have a lot of confidence about getting to their destinations safely and quickly.

A budget roadmap for financial success

A budget does the same thing as those Triple A maps do and a written financial plan is just like the triptik. A financial plan contains your goal and the steps you will take to get there. It details the signs you will look for to indicate you are moving in the right direction toward your goal. It contains notes and pointers that suggest courses of action for any particular event. Like a triptik your financial plan will also point out areas to avoid. Areas that could be costly to you and throw you off course. A budget accompanies a financial plan and is based on 1) your income and 2) your goals. The budget accounts for all the money that you have as income and then it provides you with direction on either stashing or spending it. Like the map keeping you on the right road the budget keeps you and your money on track.

I once drove from Penn Hills to Virginia Beach on my own with no map. I had been there before and planned on using all major highways; no shortcuts. To make a long story short the trip was supposed to be about 450 miles. It was about 600 miles for me by the time I got finished. I was wrong about remembering how to get there and made several very costly mistakes. Thank goodness I finally figured out that there were maps posted on the walls of rest stops. The same kind of wasted effort can happen to you when you don't use a budget. Even for seasoned money managers a budget is a must. Without a budget you are setting your money up to get lost just like I did on my way to Virginia Beach without a map.

A budget is important for everyone from CEOs to paperboys

Anyone who has any kind of income should be using a budget to account for the dollars coming in and going out. That means millionaires as well as kids delivering newspapers. Believe it or not it is just as easy to lose hundreds of thousands of dollars as it is a few bucks if you are not paying attention. I did it and learned the hard way. Actually, in my case I did have a budget but didn't stick to it and paid the price! Budgets can be very simple and are expandable to meet the needs of even the most complicated situations. If you have $1.00 of income and only one expense your budget will be pretty basic. Obviously, the more money you make and the more expenses you have there will be more items to manage in the budget.

Some people look at the budget every day. That is ok, but for most people, referring to your budget when they are paid or paying bills is good. On the usual expenses you may not see too much change very often in your budget. However, there will be times when there is a new event in your life that requires a budget review. Most companies conduct a regular budget review and you should as well. The budget will need changed when there is a change in your income, an expense has been added or eliminated, or you foresee an expense in the future that will need addressed. A budget is not a static object. It will change as your financial circumstances change. Your job is to stay on top of those changes and account for them in your budget. Keeping your budget updated with accurate information is critical to your personal financial planning.

A budget will find more money for you

Finding opportunities to get more out of your income is one of the most important reasons to maintain an accurate and current budget. The goal I have for every one of my students is to get them to a point where they can demonstrate they are getting 125% for 100% of their money. In order to do that you have to be able to pinpoint areas where you can 1) generate more income, 2) pay less in tax, or 3) cut or eliminate expenses. When you learn to read your budget with an eye trained to look for those opportunities you will find yourself getting much more than 100% for 100% of your money.

It doesn't hurt to get help

There is one other interesting note regarding Triple A maps and triptiks as they relate to financial planning. Triple A trains people to become "Map Markers". Map Markers are people who are very familiar with current road construction issues, seasonal weather as it relates to travel, and even rest stops and sight seeing. They are the biggest reason the triptiks are so popular. All the extra traveling insight the Map Markers add to the triptiks makes a big difference for Triple A members that someone using Mapquest or another mapping program wouldn't have. That same can be said about people who use financial coaching, like that found on this site, in setting up their own financial plan. They have a real advantage in having a seasoned financial coach help them avoid mistakes and think of things that they may not have come up with on their own. Budgeting is crucial to your money success. Be sure to write one, get seasoned help reviewing and finalizing it, and then stick to it!

My favorite piece of the grant writing puzzle is crafting the case for support and the research required to back it up with stats and facts. Writing your grant budget is no different. Many find the grant budget their least favorite piece of the grant writing puzzle and may be a bit insecure about their capacity to pull a winning budget together. This article will show you how you are in fact perfectly practiced on this financial story-telling topic.

The first key to writing an engaging budget is writing the budget "story". To ensure success, you must enlist your organization's finance manager and program officer; they will make the difference of winning or losing the grant. Your relationship with these individuals is crucial - you must write the grant as a team. Why? It is simple. This is the only manner in which you can create an authentic budget. A budget that does not under or over estimate the cost of the program you are required to fund.

A budget is all about numbers, right? Wrong. This is where your program officer tells you a story. You see, a successful budget isn't just about the numbers; it is also about quantifying the numbers by including a budget narrative. A budget narrative backs up your case for support; it lets the prospective funder know how you arrived at that cost (research) and why this cost is essential to your programs' success and sustainability (story). So how does this work? Here is an example. You have your excel spreadsheet budget or their (the funder) budget template finalized to perfection because these numbers came from the program officers needs for program implementation and the finance officers ability to attach a justifiable cost to this programs needs.

Now let's take one of the itemized costs and create a narrative for it. Imagine that the program which requires funding is for a team of plastic surgeons to travel to Haiti and care for the earth quake victims (true story). Clearly this budget will include travel, lodging and meals. So how do you find out the cost of a hotel in Haiti? Research and phone calls. In the budget narrative you tell your funder what hotels you contacted, who you spoke with and then take an average of the accommodation costs based on contacting a few hotels in Haiti. Next, Haiti at that time was not safe - it wasn't secure, these surgeons needed security to navigate the area and ensure their safety. How did I know the country was very unsafe - one of the surgeons told me in a conversation; after that conversation I placed security in the budget and then spent a significant amount of time researching and finding those who offer security in Haiti. When you dig deep, you end up with an authentic budget and a savvy funder will know you are sincerely fiscally smart and responsible.

Keep your budget and budget narrative to one page, two at the most. How is this possible? Not all items in your budget require explanation. For example, you could lump airfare, lodging, and meals into one sentence. It's unnecessary to explain supplies unless its cost is outside the norm.

Now let's be clear, if the prospective funder has a very specific template you fill out and they do not ask for a narrative to your budget - do not put a narrative in the grant. This simply goes back to the golden rule of grant writing. If a funder asks you specific questions and only wants those questions answered - you do exactly that.

What I've really given you here is a grant writing process for budget generation. Sit down with those people that need the stuff and those people who work the numbers. When this happens you have a full understanding of the project and can identify gaps (like a security team to escort surgeons in Haiti). Foundations are making an investment in your project - they want to know and understand where the money is being spent and if it is within reason. Trust me, funders will know if your budget is a hunch and those grants attached to it may become confetti.

The internet is a saturated jungle of home budget software ranging from the simple, to the very complex in functionally. To successfully navigate this maze of advertising mayhem, and walk away with the correct Home budget software or budget spreadsheet; you will need to carry with you, in the background of your mind as your search, those critical key elements that are vital in making your family's home budgeting dreams come true! Key elements such as user-friendly interfaces, text and graphics with useful information, and useful supplemental add-ons.

The role of advertising!

P. T. Barnum, and American circus entertainer once said, "There's a sucker born every minute". Thou I, being part of the populace, and with mild embarrassment, would have had Barnum at that time in history spoken, "If given the right ploy, anyone can become a sucker!" In the days of Barnum, just as it is in today's world, advertising's ultimate goal is to turn, even the mildest curiosity, into a successful sale. And to that end, you the consumer is faced with barrage of advertising strategies, all geared for one thing. To remove from your wallet, as much money as possible.

Key elements in household budgeting & the consumer's responsibility!

Element one - Your budget spreadsheet or home budget software should have a user-friendly interface. It should be flexibly and easy to understand in its operation. You should not need a degree in programming in order to use or understand it. Likewise, its working environment should be designed with you, the consumer in mind. You should not have to struggle to navigate from one section of your home budget to another. The screen's layout should be easy to understand. Some programmers believe that more is better; and so to that end they have fatten up ever screen with excessive graphics and/or text that contains little or no useful information. Your home budget software will become an integrate part of the lives of your family. The using of it should not stress you out! If you want stress... have children!

Element two - Your budget spreadsheet or home budget software should provide you with useful information. It should be noted here that the function of a home budget is NOT just to formulate reports on monthly transactions. The function of a home budget is NOT Just to record income and expenses as they occur. Your family is not JUST about living or existing! What about dept management? What about your short and long term goals in life? Part of the totality of any home budget software is to deal with all of these issues. For, it is all of these issues that impact the way you live and the dreams you have about your future.

Your home budget software should aid you in the reaching your short and long term goals in life. If it does not, than you should not be using it. Likewise, your home budget software should provide you with useful information about your future projected bank balances. Elements that contain Information such as daily bank balances, your lowest weekly bank balance, and bank balance trends over time (charts). If you are going to budget out your expenses, then those projected expenses will (over time) affect your bank balance. These elements are paramount to any successful home budget. Without their implementation, your financial lifestyle will revolve somewhere between banquettes and begging! Your budget spreadsheet or home budget software should also provide a means of correcting deviations between projected and actual income and expenses. Unless you plan to record every little expense, then expect deviations between your project bank balance and your actual bank balance.

Element Three - Your budget spreadsheet or home budget software should provide you with useful secondary supplemental add-ons. Everybody loves the pop-up calendar and calculator; but what do they offer that you do not already have on your computer? Let us examine four types of add-ons that not only offer useful information, but also aid in the reaching of short and long term goals. They are savings, credit cards, charts, and Christmas.

Savings- If you are planning to go beyond a stagnant type of life style, then you will have to integrate into your financial picture some type of savings program. For it is savings over time that allow for the achievement of many short or long term goals (L.T.G.'s). This one particular element should be built into your home budget and allow for savings, all from one bank account.

Credit Cards- Even thou I am not a great advocate of credit cards, they do (if used correctly) allow a family to establish over time, a good credit history. In addition, in times of calamity, credit cards are a quick avenue of cash! When looking for a budget spreadsheet, look for a home budget that allows for the use and management of a least one credit card. In addition, your home budget should also give you the ability to swap out any projected budgeted transactions, for a credit card transaction.

Charts - One of the greatest advancements in computer technology as been the processor speed. Today it possible to chart just about any information; but that is not the same as saying that all charted information is of value to you, the user. When considering a budget spreadsheet or home budget software, ask yourself, "Will the charts provide useful information necessary for me in achieving my short and long term goals in life?" "If I stay on budget, will my bank balance fluctuate either up or down?" "Does my projected budget TRULY reflect by lifestyle?" These are important questions; and the answers will guide you in choosing the best home budget for you and your family.

Christmas - At first glance, one might not consider a section that deals with Christmas as being a useful secondary supplemental add-on. Yet, you might feel differently if you have to deal with items bought and then placed on lay-a-way, the correlation of expected income against actual purchases, and the keeping of a list of who gets what. A home budget software or budgeting spreadsheets that offer a section that deals with Christmas, can aid to making that time of year stress free.

So, let us pull it all together!

Putting aside all of the glossy advertising gimmicks, the flashy website "calls to action", and the animated icons; sooner or later you will have to actually use your home budgeting software. Understanding role of key elements and the philosophy of budgeting (L.T.G.'s) will help you in having a successful home budget. Remember, your budgeting spreadsheet is not so much about the crunching of numbers, as it is about the helping you to bring into reality, the dreams of your life! So, as you face the jungle of home budgeting software, keep in mind the elements necessary to making your dreams come true!

"I only have a small business, I don't need a budget."

"I don't have enough money to budget."

For many small business owners, the word "budget" is something for the bigger company - maybe they'll have one when their business "grows up."

What is a Budget?

The simple explanation is a budget is a plan for how you will manage all financial resources and all expenses for your business. The basic equation that you want to demonstrate in a budget is as follows:

(estimated )Sales minus (estimated) Expenses = Profit (or loss)

How to create a Budget

If this is your first time to work on a budget for your small business, you might work from the perspective of having to list cost of goods or services plus all of your operating expenses to start the process.

How much does it take to operate your phone line? What is the cost of other utilities? How about the cost of a company vehicle, or what is the cost of transportation if you're using your personal vehicle to also serve as a company vehicle. Do you need any supplies or inventory to operate your business? How about any employee payroll, payroll taxes or independent product or service providers? Remember to include everything you spend money on to operate your business even if you allocate some of the expenses to "petty cash" expenses, such as parking or bridge tolls while traveling to see clients.

I recommend that you create annual budget, as opposed to a monthly budget, so you can identify any expenses that you may have that come up only once or twice a year such as insurance and include them in your list of expenses. This allows you to amortize or spread the cost of this out over several months so that you can plan ahead for the expense.

As you work on your list of expenses keep in mind that these are the expenses that are necessary to operate your business. These should not be your "wish list" unless you want to budget in some expansion or growth. You may want to create a budget with just the necessities and another version of your budget with expansion expenses listed so that you can see the cost of both separately.

With a dollar figure to work with of your total expenses you are able to set the standard for or evaluate your sales figures. If you are new to your business you may need to use the dollar amount of your expenses to help you determine what your sales need to be in order to cover all costs and show a profit. If you have been in business for a while you can evaluate whether or not you are producing a profit by looking at historical sales figures.

As you conduct business during your budget year you should compare your actual income and spending with what you estimated. This will allow you to manage your spending so that you don't over spend and cut into or eliminate your profits. You will also be able to see if sales have met expectations in order to cover expenses and still remain profitable.

Who should Budget?

Every small business owner should budget, no matter the size of business. I have heard some small business owners say their business is too small to budget, but that is not true. If you don't have a written plan for what your financial obligations are and how your revenue will cover those obligations and leave some money unspent, then your business will never grow. In fact, you may out-spend your revenue and put yourself out of business.

Why Budget?

Budgeting for your small business gives you control over your finances. By looking ahead to what you know or can reasonably estimate what your expenses will be, you can then make financial decisions that will keep you from over-spending, or give you the freedom to invest in the growth of your business.

When Budget?

Every small business owner should have a budget to start their business and then review it annually. I recommend that small business owners review their budget several months before the end of their fiscal year. When I say review the budget I'm talking about comparing projected budget with actual. In the comparison you can see if your estimates were realistic. You and your CPA can also plan for last minute tax strategies, or plan to implement strategies in the up coming year's budget.

The Goal in Budgeting

Remember, the goal of having a budget is to stay in control of your finances in advance. Setting the standard for your spending and revenue and having a tool to compare with actual will give you the control that you need to stay profitable. At the very least it will give you an indication of whether or not your business is actually profitable and not just busy.

Copyright 2005 Melody Campbell

Finance is often made more complex than it needs to be, and proper personal finance budgeting to build wealth need not be stressful. Simply by following a few simple basic rules of personal finance your budgeting will not only get you back on financial track but begin the process of wealth creation that we all deserve.

The principles of a sound wealth building system all require the foundation built on personal finance budgeting. Solid and consistent budgeting is one of the laws of personal finance that you break at your own expense. The cost of not following your money, and knowing how your money flows in and out of your possession is dear, and a very common mistake. But, what are the principles of successful budgeting.

The first principle of personal finance budgeting that comes before any dreaded calculations or budget sheet assessment is to remove all the emotion from your finances. This is the hardest and most important of the personal finance budgeting secrets to be revealed. If you find yourself wracked with debt anxiety, overwhelmed by countless financial obligations, or just simply hate counting bills and income, you are not alone. But it is an essential and important to take effort to remove any emotion from this process. You are simply counting numbers,, to paint a map of where you are now, and to measure progress towards your wealth destination. Removing the emotion from your personal finance budgeting will be a work in progress, and you should always remain on guard for its returning.

The next step to when personal finance budgeting will be to compile a list of both your assets and your liabilities. With this step in the budgeting process we are trying to evaluate your net worth. You simply need to make a list of what you own, assign each item a number as to what it could be sold for, or its current worth, and subtract from this list what you owe. For example, if you own a boat that can be sold for $1500 and you still owe $750 you would be left with a value of $750 that could be considered a part of your net worth. By determining these numbers in personal finance budgeting we are able to a better idea in the broad sense of what you are worth financially.

Following the determination of your net worth, our next budgeting step is to determine what your dynamic finances are. This sounds more complicated than it is, I am only asking that you make a list of what your monthly income sources are and how much you bring in each month from these income streams. We then need to compile a list of your monthly expenses, what they are and how much the subtract from your monthly income. Proper budgeting your personal finances means leaving no expense or item off the list, no matter how small, account for everything. This budgeting task reveals to us the speed that you are travelling with your finances, either to financial ruin or towards your wealth building destination.

You have accomplished all there is to wise personal finance budgeting. You are now capable of assessing what your worth is, and have an idea of what your destination is (your wealth building goal), and you know at what speed you are travelling towards it monthly. Your budget provides you with a clear understanding of where your money is and how it is flowing. With this information you can now make wiser decisions and streamline your finances, all with the help of a little personal finance budgeting each month.

When it comes to creating a budget, here is what every person should know. There are three simple, but essential steps. First, keep a positive attitude and change the way you think about budgeting. Next, stay motivated and remember why you want to create a budget. Lastly, establish manageable goals. Don't set your expectations too high. When you finish this article, you'll be equipped with the tools needed to create a successful budget.

The first step of creating an auspicious budget is keeping a positive attitude. Negativity, in relation to financial planning, only results in failure. Many people consider budgeting as a "financial diet", limiting them from buying the things they want. In reality, a budget is an instrument to a larger goal, like retirement, college, or even a new car. So don't think of a budget as a tedious undertaking but as a mean to achieve your goals. The slow pace of a budget often discourages people living on a budget. Remember that the process is meant to be slow, because it's basically a method of retraining your spending habits. If you maintain a positive outlook on budgeting, staying motivated will be no trouble at all.

The second step of planning a budget is staying motivated. Maintaining motivation is the most important step in financial planning. If you lose your motivation, you are more likely to fall out of your budgeting routine. To prevent the loss of incentive, find small ways to reward yourself for achieving parts of your goals. Say you're saving $6,000 for a down payment on a new car. For every $2,000, reward yourself by going to a movie or going out to dinner. Another approach of sustaining motivation is to remember why you created a budget. Print out your budget and record each advancement made towards the end goal. Look at the print out daily, in order to stay on track. Staying motivated is also made easier by setting realistic goals.

The last step of constructing a successful budget is establishing manageable goals. The point of a budget is to slowly save money, not alter finances overnight. To ensure you're setting realistic goals, know the full extent of your finances. Before you even begin creating a budget, you should know where every dollar of your paycheck goes. Ask yourself questions like, 'How much do I spend on groceries per month?' or 'Do I make frivolous purchases?'. Knowing you finances helps guarantee that your goal is realistic. When creating a budget, many people make the mistake of underestimating how much time to assign a goal. For example, two months is not enough time to save the money required to move. Carefully plan out your goal in order to know how much time to allot it. If you do this, you will be fully prepared to create a realistic and successful budget.

Now that you know the three main steps to create a successful budget, keep this article in mind. Remember the three steps: keep a positive attitude, stay motivated, and establish manageable goals. Put these steps to use, and you can create your own successful budget.