Tuesday, January 20, 2009

Creating a Personal Budget

Here are some links on how to create a personal budget and other budgeting information:
Seeking Success -- at the bottom of this article there is a link to a really great Budget Worksheet.
Sound Vision
Dave Ramsey -- this is one of the best sites with really great information
Suze Orman -- Her site and books are generally more investment oriented. Once you get to the point that you need to start investing some of your money, she's got some great advice.
My Money -- established by the government to help Americans get their financial problem under control. It looks fairly basic, but has a lot of great information and links.
MSN Money there are several helpful articles here.

Personally, we use an excel spreadsheet that I created, which lists all of our expenses and then delegates them out to either myself or my husband. He is responsible for some of the expenses and I am for others (we have never combined accounts). At the end of the month, I reconcile actual money spent versus the budgeted amount. Things come up sometimes, and we aren't about to let our lives fall apart for the sake of a budget. However, we strive to make our budget monthly. It's not always easy. My husband is in college, and there aren't easy-to-find scholarships when you're in your 30s; through planning, we've been able to add those expenses into the budget to avoid having to pay for student loans.

Really take the time to look at areas you can cut costs. We have a few bills that we should cut but haven't or have taken on more than we should at times. It's going to be difficult to save if you aren't willing to cut some of the costs that aren't really neccessary. Example: We don't have cable. It's not worth the cost for us because we generally just watch the basic channels anyways.
We also don't have a home phone. We had a home phone and I had a prepaid cell phone, but I found a cricket plan that gave me unlimited calling and texting for a few dollars more than my home phone and I decided it was worth it to have a cell phone that wasn't out of minutes when I needed it (and I no longer have to pay for the pre-paid phone--it's basically a wash). Some people may need the home phone and not the cell phone--the idea is to look into your expenses and figure out what is really working for you, what isn't, and what needs changed, dropped or added to your budget.

Be realistic. My husband is a smoker. Most people don't want to admit how much money they waste, so it was no surprise that my husband told me $50 a month. Ummmm, no, I think the average smoker spends more than $50 a month and I can say this because I am an ex-smoker. The point is, you have to be willing to take a hard look at how much you really spend and be realistic with yourself about it. If you lie to yourself about your spending, you will never get a handle on it or be able to control your budget.

Give yourself a little wiggle room. I have always been a type A personality. High-strung, stressed out, perfrectionist, who can't stand for things to be anyway other than the way I expect them to be. Well, the truth is, that isn't going to work with a budget. We're all human (I hope) and we're going to make mistakes and sometimes unexpected expenses occur (babies are the first to come to mind). There's no point in beating yourself up for not always making your budget. Expecting perfection in this case will likely just create more stress than it's worth.

Re-evaluate. At least once or twice a year you should re-evaluate your budget. Is it working for me? Are these still our financial goals? What could we cut or add to make this work better?
Ask yourself some of these questions to make sure the budget you created is still the budget you want and need. If it's not, fix it.

Accountability. Hold yourself, your spouse and other family members accountable and they should do the same for you. Just don't get into the blame game. There's a fine line between reminding someone that there's no money budgeted for a certain item and blame or even the perception of blame (for there not being money available).

If you don't already have a Personal Budget, I hope you'll take the time to make one. If you've already got one, take some time and review it to make sure it's what you really need!
Good luck.

1 comment:

  1. Great tips here... thanks! You are so right about having a little wiggle room.

    Frugal Family Fun Blog
    Good times on a budget!