Budget Your Financial Success

Why a Budget:

Every person, family, business, organization and government must have a budget in order to successfully achieve your financial goals. A budget is a road map that increases your chances of successfully achieving your goals. A person can use a budget to develop a rainy day fund of 3-6 months of spending money. A family can use a budget to provide healthier meals for the entire family. A business can use budgets to increase their profits.  Non-profit organizations can use budgets to provide more assistance to those in need and a government can utilize a budget to increase opportunities for their citizens to achieve success. Wherever money is involved a budget should be available.

How to Begin your Budget:

The first step is to record every penny that is earned and every penny that is spent. Notice two words in that previous statement. The use of the word penny and record. All money must be included. This means everything from your mortgage to your dry-cleaning. Every penny must be recorded or written down.

Start with your big monthly bills by locating past or present bills or checking account statements. But you want to record every penny. It may take a month or more to get everything compiled. A small memo pad can help. By carrying a pad around for a few weeks and writing down what, where and when you make any purchase. 

Grab a copy of your pay stub and record your gross pay as well as every deductible including taxes, insurance deductions, 401 contributions. If its on the pay stub it must be in the budget.

How to Manage your Budget: 

Ledger Pad: 

There are so many options when managing your Budget. The simplest is a Ledger notebook where you record your entries in a ledger pad. Simple to record but difficult to create reports.

 Spreadsheet:

The next option is create your own spreadsheet. Cheap but labor intensive. Also lacks the many options available from the many professional options.

 Freeware: 

There are plenty of freeware budget software options one being dsBudget. Follow this link to read about dsBudget and many other free Personal Finance Software options.

Free Personal Finance Software Reviews from CNET.com

Commercial Packages:

Complete software packages begin around $40. I use Quicken and recieved my version free when I purchased Turbo Tax. This article provides a quick review of other packages and also reviews several online

Finance Software Reviews from Forbes.com

Incorporate Your Budget:

The budget is a tool that needs to be used. Teach your children how to start their own budget based on their allowance. Make sure you include a savings plan. Incorporate your budget in your day to day life by including all revenue and expenses.

Use the budget to set goals to finance savings, tuition, vacation, retirement, weddings and everything else that is part of life. Revisit your budget every year to make any adjustments or changes in income and revenue as well as new goals.

Improve Cash Flow:

Once you set up your budget and complete adding your expenses and revenues you will immediately see if you are spending more then you are making. Hopefully you have a positive cash flow and make more then you spend. Either way your work is about to begin.

Start reviewing your expenses. Look for areas where you are spending too much money. Remember everyu penny counts. Here is a quick example: Three times a week you buy a soda from teh vending machine at work. Its costs $1.50 for a 12oz can of soda.In the grocery store cans of soda frequently go on sale 4 12 packs for $10 which is .21 cents a can. Saving $1.29 on a can of soda might not sound like you are living the American dream. But you are saving $3.87 a week, 15.84 a month or 185.76 a year. That is just a small expense that quickly adds up. Review all your spending in the same manner.

Making the Budget Work:

 Pay Yourself First:

Before paying any bills the first payment should go to your savings. It could be a percentage of your gross pay or perhaps on $10. Regardless of the amount each month make a deposit in your savings account and forget it is there.

 Rainy Day Fund

One of your financial goals should be to have 3-6 months worth of expenses saved.  Cars need repairing, things around the house break, people get sick, jobs are lost. A rainy day fund helps you get through the tough times.

 Family Fun While Saving:

Find alternative that are less expensive and can be more family friendly. Taking the family out to a restaurant on weekends adds up to a lot of money. As an alternate you can plan a special dinner night at home. Include the whole family in preparing and planning your big night. Together as a family choose a recipe, go to the grocery store to purchase the ingredients, work together to prepare the meal the table even make some decorations and don't forget a favorite dessert to enjoy together.

  Prioritize:

Prioritize your expenses.  Go through each expenses and ask yourself "Is it worth it?"  If an item is necessary see if it can be replaced with a less expensive item. Giant grocery store have a brand name frozen french fry that is just as good as the name brand counter product but half the price. For Giant shoppers they also have a frozen Sweet Corn on the cobb that is better the the famous name brand but half the price.  If you can't find an alternative look for a different place to make your purchase. Food seasonings are so much cheaper at Costco then at your typical grocery store. Many items can be bought when they are on sale and stored for future use. Searching online for items can also save substantial money.

 Control your Spending

 Many times we spend money without really thinking of it everything from picking up a magazine at the grocery store counter to buying a new computer game. This money quickly adds up and can keep you in the negative cash flow. Use your budget to help remind yourself of your goals and be aware when spending your hard earned money. Hide credit cards from yourself or take the cash for some expenses and place it in envelopes labeled for that expense. For example if you have a $50 a month work lunch expense each month place the money in an envelope marked 'Lunch'. Use it only for your monthly lunch. When that envelope is empty you can no longer buy lunch and now have to bring in your own.

 Reduce your Debt

How much money do you owe? What kind of debt? Include mortgage, credit card, student loans, personal loans, home equity loans, car loans and whatever other debt you are carrying. Record the interest rates you are paying on each loan and as you increase your cash flow by finding ares to save use the savings to pay off the loans with the highest interest rate.

Don't Give Up

There will be times when you lose focus and forget about managing your budget. Other times you may experience hardships that discourage you from reviewing the budget. Remember its your budget your tool its meant to make managing your finances easier. Find the best way to make this tool work for you.