Personal Budgets - How to Get it Started

Whether you realize it or not, we all live on a budget. It might be that Excel spreadsheet or a collection of sticky notes tucked inside the back of your checkbook. Or maybe, your budget is nothing more than some quick calculations you do in your head.

But regardless of where you keep your budget the fact is, we all have one. We compare the money we have coming in to the money that needs to go out and then decide if what's left over is enough to live on until the next payday rolls around. That's a budget, plain and simple.

Now, if you want to maximize your money, it would help if you could tweak that budget a bit and to do that, you're going to have to actually put it on paper and really give it some thought.

I know, I know... not your idea of a fun evening? Maybe not but if you'll spend the time to create a realistic budget, you'll likely find you have a whole lot more money to work with. See? I knew you'd come around :)

Here's some tips to get started on the road to a working personal budget.

A budget doesn't have to be fancy to work. It does however, need to be complete.

To get started, you want two columns - one for money coming in and one for money going out. In your income (money coming in column), list all your regular monthly income, such as your paycheck, child support, alimony or any other funds that might be coming your way.

The second column is for expenses (your money going out). Start by listing all of your regular bills - utilities, car payment, rent or mortgage, insurance, credit cards, etc... you get the idea. If you pay it every month, it goes here.

Ah, but you're not through yet...

Want to see where your money really goes? In that expense column, list everything that isn't a monthly bill but that requires some of your cash flow. Like what?

Groceries, gas, tobacco, beer, clothing, movies, DVD's, download fees, restaurants, your Monday morning slurpee and Friday nights out with the girls (or guys as the case may be). All of these things are actually more influential on your budget than the car payment and those other primary expenses. Don't believe me? Okay, try this...

Let's say that little Jimmy or Janie wants to play soccer but to do that, you'll have to fork over $150 for sign up fees and uniforms. Now, if you've budgeted properly, you'll have money set aside for this expense but if you haven't, well...I'm willing to bet that the soccer fees get paid and the car payment has to wait.

Don't have kids? Then try this one - you have a medical emergency and have to pay $100 at the emergency room. Do you forego medical treatment to pay your credit card bill? I didn't think so.

See, all these little insignificant expenses are actually the driving force behind your budget. How many times have you sat down to pay bills only to discover that you don't have near the amount of money you should? Where did it go? Yep, you guessed it.. the restaurants, the night clubs, Netflix and of course, those Monday morning Slurpees.

This is why you need a budget.

To really get a handle on your money, you need to know exactly where it goes. So start calculating. How much do you spend on clothes? Do you buy magazines and books? Is eBay your most dangerous vice? Start looking at how much you spend per month on non-primary expenses - go back and add up receipts if you need to or, even better, start writing down everything you spend and track your cash for one month. Just one month, and you'll quickly see exactly where you money went.

So, now that you've gotten a real picture of what you're spending, add it up. How much are you spending each month? And more importantly, how does that match up against what you're bringing in?

This is probably the most eye-opening step of the budgeting process. Its that "oh, wow!" moment when you realize that your pack-a-day habit is actually costing you $125 a month (that's $1460 a year!) and the fast food fix you need twice a week adds up to about $56 per month or $728 per year. Certainly not big bucks but all these things add up.

And now that you've written it all down, you can actually start budgeting. Look at the expenses that aren't absolute and see where you can make adjustments.

Could you eat out just one night a week instead of two? Quit smoking, set a clothing limit or reduce the number of DVD's you buy? The truth is, there are several ways to save money and free up your cash flow so that you can create a truly workable budget. How you ask?

Try these out for size:

• Subscribe - Instead of buying your magazines off the shelf, subscribe to the ones you just can't live without. Most magazine publishers give big discounts to annual subscriptions and you'll save a chunk of change off the cover price.
• Trade - If you've got friends that read the same kind of stuff you do, offer to trade. Whether its magazines or books, you'll both save by learning to share.
• Cook - Instead of eating out, learn to cook. Who knows? You might discover a brand new talent you didn't even know you had.
• Garden - If you have the space and the time, consider growing some of your own vegetables and fruits. Homegrown tastes ever-so-much-better than store-bought and you'll save money in the process.
• Buy used - While you might cringe, there are some really nice second-hand stores out there these days that specialize in gently-used clothing. You can find designer brands for a fraction of what you'd pay if you bought it new.
• Walk - Instead of driving everywhere, save on gas and walk or ride your bike. Its healthier for you, the ozone and your wallet.
• Clean out your car - Since we're talking about saving gas, cleaning out your gas will actually improve your gas mileage. The more weight you're carrying, the more gas your car has to use.