Budgets are the planning tools of very wise people. When you consider how hard it is to obtain money and how easily it slips through your hands, you can see why a budget is important. A budget is easy to make, it is simply a list of what money you have coming in and where you are spending it.
1-Creating a Budget
The first step is knowing the amount of incoming and outgoing money. If you are unsure exactly where the money goes, you can keep a cash spent worksheet for a month before attempting to make a budget.
A cash spent worksheet is a simple listing of everything you spend for a month. Purchase an inexpensive notepad and keep it with you. Create headings, such as childcare, food, entertainment, utilities and miscellaneous. Enter each expenditure under one of the headings.
At the end of the month, using your worksheet, total each heading and transfer this amount to a cash flow worksheet. You can find a good cash flow worksheet here: http://http://partners.leadfusion.com/tools/kiplinger/budget03/tool.fcs
This is also the time to plan for those yearly expenditures to add to your monthly budget. This site covers most of the common ones.
On another sheet of paper, write down all of your income. You can now combine these three pages on one and create your budget. Here is a budget form you can print out free:
2-Balancing the Budget
In the event you have not earned more than you spent, this is where a budget can really help you. A budget will show you where you need to take steps to cut back and spend less.
Once you know where your money is going, you can look for ways to control the flow and divert it to where you need it to go. Recognizing what changes you need to make are easy, when you see excessive totals under one heading.
If you have earned more than you spent, you have discretionary income left. Now is a good time to incorporate it into your budget as savings or for investments.
Just having a budget will not help stop a wasteful flow of money, unless you stick to it. There are other ways to aid your budget in creating a wide gap between you and debt. Smart spending, when you do make a purchase, starts with weighing the pros and cons of each purchase and a little shopping around for the best bargains. The following links will help you keep more of your money.
See how much a left on, unused light will cost you.
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Comparison-shopping can save you a bundle each month.
Learn how to spend your hard earned money wisely at this site.
Budgets are a good thing, but remember you do not write them in stone. If your first budget just doesn’t work, then alter it so you can live with it but always include saving in your budget. You’ll be glad you did.