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Face Your Fears

by Don Current on September 20, 2010

Build Your Budget

Photo courtesy eric731

What is it about budgets that scares people away? It is such a powerful tool in taking control of you money.

I believe one reason people don’t like budgets is that they equate budgets with cutting spending. That is not at all what a budget really is. It’s a great tool to help you cut your spending, but that doesn’t mean you have to cut your spending to create a budget. All you are doing is planning in advance what to spend your money on. You are going to receive and spend the money anyway, so why not create a plan for it. This will help you make sure you have money left over to spend on the things that are important to you instead of getting to the end of the month and realizing you didn’t hold any money back for that dinner out or that new game system.

I believe another reason is that they feel it is too much work. I will agree that starting a budget when you haven’t used one before, or tracked your expenses can be very difficult to get started. It’s going to take quite a bit of thought and trial and error. It will take several months of making adjustments before you get it working smoothly. After that point though, it’s really hardly any work at all. In fact, I’d say that it is less work at that point than it is to operate without a plan and try and figure out what your bills are for the coming month. The first month is going to be the hardest because you are starting from nothing. Each month after that it will become easier and easier until it is second nature.

People also believe that budgets are restrictive. You won’t have any money to spend on the things you want. Again, the opposite is actually true. If it is something that is important to you, then you can plan it into the budget and make sure that you have money available when it comes time to spend it. You still have the same amount of money coming in and out, you just have a plan up front on how to spend it.

If you’re not using a budget or spending plan right now, then there is no better time to get started. Start tracking your expenses if you need to in order to figure a starting point for each category. Write down all of your non-monthly expenses such as insurance, property taxes, self-employment taxes, and etc. Figure out what your monthly income will be for the upcoming month. Using the data collected, start spending each check on paper making sure to set aside savings for those future expenses you wrote down earlier. Also make sure to pay yourself. That means saving money for your future like retirement and children’s college savings. Spend each and every paycheck on paper until each one is entirely spent for the coming month. Now all you have to do is work the plan. If some things don’t work out right, don’t fret. Make adjustments and go forward. It’s a work in progress. You’ll have it running like a well oiled machine in no time.

What reasons do you have for not starting a budget today?