Budgeting 101

Its Friday and you have just ran out of money, your did your budget but somehow you still managed to come up short on funds. You still have a week left before you get paid again and have no idea how you are going to make it unless you go borrow it from someone. This cycle has been going on for the last decade yet you can't stop it. Whats the problem you say? I have a budget but those things don't work, we just live in a rat race and will never get out, thats just the way it is...

STOP!!!!

My Dear friend, this is a common problem for a lot of America. Its called living on the idealistic budget. You've programmed everything based on income, but you're not controlling your spending. You have to let the budget control what you are spending or else is WON'T WORK!!

For example, lets say you are using the envelope system of budgeting. You have an entertainment monthly budget of $200, and you get paid twice a month. That means in each pay period you would put $100 into your entertainment envelope. When you go out for entertainment you take your envelope with you and you pay for whatever you do (eating out, movies, ect) out of the envelope and put the change back in. This way you know exactly what you have left. But when you look in the envelope and its empty, than you must STOP spending in that category until you get paid again. The principle works with every category of budgeting. Its not complicated; its what's called self-discipline.

Your budget always needs to be realistic, meaning you can't put $20 dollars in the gas envelope driving a F150 and expect it to last until next pay day unless you never drive the thing. Also a good idea would be to have another pair of eyes to look at your budget. A lot of times we miss things and it takes to people to see where something can be cut or where you could use a little more.

Another good rule of thumb is try not to be to detailed (At first). Sometimes all a budget requires is a note pad and a piece of paper, you don't need quicken, or msn money to do your budget. Just write what your income is at the top of the page, and list all expenses until you get to $0. This is called a zero based budget when you spend all the money BEFORE the money comes in (we do that anyways right?) But in this case you are looking toward the future and can budget the money before its spend and not end up with negative dollars each month.

I keep an excel spread sheet budget and if you would like a copy please email me at kimikeclark@msn.com

I am happy to share!