Budgeting 101 - Personal Budgeting Made Simple

If you are ready to get out of a pattern of excessive spending, you will need to learn to discipline yourself.  When you are ready to make a purchase, ask yourself these questions:

• 1. Will the purchase appreciate or depreciate in value? If it will depreciate, how long will it last? How much will it be worth then? Will I be able to sell it? If it will likely depreciate, is there an alternative that will satisfy my needs and cost less?

• 2. Do I really need the purchase, or can I live without it? Are there other ways to do what it does, even if they are more time consuming and less exciting or readily available? What will happen if I don't buy it? If I can do without it, how much closer am I to my goal?

• 3. How am I going to pay for the purchase? Do I have the cash, or do I have to go into debt or risk not having the money for my regular bills?

OK, now that you are psyched to start the path to financial freedom, let's get on with the details of a basic budget plan!

You need to find a pleasant place to keep your budgeting materials.  It should be very accessible so you don't have to spend a lot of time pulling the materials out every day.

Remember - You are doing a very important job.  Take pride in the work you are accomplishing by taking care of your hard-earned money as you would take care of your garden.  You may feel that it is thankless work at times, but when you start reaching those goals and feeling the benefits of true financial health, your will be able to thank yourself and reward yourself handsomely!

Phase I - Getting Organized

Supplies Needed - Two baskets or trays (such as Inbox/Outbox), one labeled "Bills Received" and one labeled "Receipts".  One Calendar that has enough space to write each bill on when the bill is received.  A Yearly Records box -  This could be an accordion file with alphabetic tabs.

Daily

• When mail is received, open each bill and place it in the Bills Received basket.  You may also use this basket for other important information such as bank statements, etc.
• Put receipts you have accumulated from the day in the Receipts basket. Note:  Be SURE you keep all receipts.  If you don't receive a receipt for a purchase, write one yourself.

Every 2-3 Days

• Sort the mail from the Bills Received basket.
• Reconcile bank statements and file in your Yearly Records box.  Note:  If you use a debit card, be sure you maintain a register for each purchase.
• Figure out the last day you need to mail each payment and the amount of the payment you will make.
• Record the bill and the amount on the appropriate day in the calendar.
• Check the calendar for any bills due in the next few days, write checks and mail them or pay online.

Phase II - Keeping Track

Supplies Needed - Two baskets or trays (such as Inbox/Outbox), one labeled "Bills Received" and one labeled "Receipts".  One Calendar that has enough space to write each bill on when the bill is received.  A Yearly Records box -  This should be an accordion file with alphabetic tabs.

Weekly

• Using checkbooks, credit card statements, and receipts (for cash purchases), fill in

the appropriate categories in your budget.  The budget can be a paper that you create with each expense or an electronic form such as the free one found at foxway.com. There are many other free electronic budget methods which you can find by searching on the internet, or you may wish to purchase one at your local office supply store.

Every Month

• Calculate the totals in each category and compare to your income.
• Record the net gain or loss in your yearly tracker.
• Review and evaluate your spending habits by comparing budget categories to income.  Decide which areas you can focus on to trim down your spending.
• Celebrate your progress (within your means, of course)!

"Never talk defeat. Use words like hope, belief, faith, victory." -- Norman Vincent Peale