Budgeting During Tough Economic Times

First rule of budgeting is do it. In order to make a budget it must be written down, on paper and on purpose. Just going through your income and expenses in your head will not help and will actually mislead you. Writing down everything you spend and every source of income creates a much more accurate, detailed account of where your money is going. Too often I hear, "I don't know where all my money goes." This is a profound and true, although sad, statement. Most people literally do no know where their money is going after it has reached their hands (or bank accounts). This is simply because they either a) do not have a written budget, b) do not stick to the budget, or c) do not review what is budgeted (either individually or as a family).

If you treat your self like a business, "You, Inc.", you will find it much easier to have a successful financial futureMany people seem to have an aversion to just the word "budget." So let's call it a financial plan. You see, really a budget should be a written plan, not just a written account of what you think transpired over the last month. If you want to have success with your money, then commit to writing down your financial plan (budget) before the month begins. This means giving every dollar a purpose. Waiting till the end of the month and then trying to recall where your money went is not how I define planning. So give yourself an allowance, for every expense you make over a month, quarter, or year (start small for now and just do a monthly expenses). This is how businesses operate. This is why most businesses make money. If you treat your self like a business, "You, Inc.", you will find it much easier to have a successful financial future. In the beginning you are not going to get it right, you will give yourself too little for "FOOD," too much for "CLOTHES" or whatever... just be patient and stick to the plan and you will get it dialed in and accurate.

I hesitate to say it, but budgeting can be fun. It just takes basic math (addition and subtraction), honesty, and communication. Most people are shocked at its affect. Couples have better communication, people feel more in control, and most people feel like they actually get a "raise" when they budget their month before it ever begins. Really, once you get the hang of it, a "family financial planning meeting" should only take 5-10 minutes a month—and then everyone knows where their money is going... instead of where it went.

Click here to see a sample workable budget I created.

Click here to view or download a sample budget on an Excel spreadsheet.