Tuesday, September 14, 2010

How To: Create A Budget

Image by Casey Serin via Flickr
As we go through life if we don't have a plan we make mistakes. Just like taking a road trip, if we don't have a 
map we could get lost. That's what a budget is, a financial map for our money.

Ben Franklin said,
"Buy failing to prepare, you are preparing to fail."

 Because we have a natural tendency to spend all we have, we all need a budget. It doesn't matter what age, stage of life, or if we're rich or poor. The most important part of the budget is it helps us coordinate our spending with our priorities. Here are three budgeting forms: Online Budget Form , Printable Budget Form and Spreadsheet Budget Forms.
Step 1 
Start the budget by entering your income at the top. This will should include all income. Whether it's salary, pension, social security, investment income, or other. 
Step 2 
Now we go to the expense section. Here we list the fixed expenses first like the mortgage/rent, car loans, and home equity loans. Also your student loans and credit card payments. 
Step 3 
List the amounts that you are saving for. They could be college, emergency, vacation funds. Don't forget to enter your monthly amount for investing. 
Step 4 
Then comes the variable expenses. These would be your electricity, gas, telephone, water, household repairs, childcare, clothing, food and dining out. Also personal care(haircuts), medical/dental, and charities. 
As you adjust the numbers you will see how the changes affect your ability to save more or less. The chart will also have a section where you can add the actual numbers so you can compare and adjust for next month. Don't forget that this is not your first and last budget. This has to be done every month for it to help you organize and stay organized. 

John Maxwell says,
" a budget is telling your money where to go instead of wondering where it went" 

The goals of budgeting are you will see where your money is going. If you see where it's going your more able to adjust spending and plan better. 
Don't worry if your doing it all right at the beginning. It takes time to get it right. But with time you will get better and better. For the items that occur that are unforeseen, that you can't budget for, that's what the emergency fund is for. 


  1. Good advice. Glad to see you used Google Docs... there is no need to buy Microsoft Office anymore, which will save folks a couple of hundred bucks.

  2. This is definitely some good advice, especially for a younger person like me who is just getting started. I also use http://www.mutualfundstore.com/financial-obligations-debt to help keep myself in line because I do get a little impulsive in the store...


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