Smart Way to Budget
December 3, 2007
Would you believe that by taking a few relatively easy steps you could quite possibly take a long overdue vacation, plan for the type of retirement that you really desire, and even start that college fund you have been thinking about since the birth of your children?
Believe it or not, these things are quite possible. All you need to implement is a spending-plan. In order to accomplish this you must first abandon all thoughts about living on a budget that you may have formulated until this point. Just the word budget can make even the most frugal of us groan, simply because we tend to feel like we must give something we really enjoy up in order to live on a budget. This is not necessarily true; begin to think spending plan rather than budget. By thinking in terms of spending plan, you can begin to think about the ways in which you wish to spend the household income. Let’s face it, working on a plan that involves actively thinking about how to spend money wisely is a lot more fun than working on a plan that involves going on a strict budget.
The first step to a successful budget or savings plan is to have everyone track every expense they make for a period of one month. This tracking process will include every single item that you spend money on, even the vending machines at the office. This is a very tedious and tiresome step in the process but one of great importance. By tracking the expenses, you will be able to see how you are spending your hard-earned money.
At the end of the month have everyone turn in a list of monthly expenditures. Once you have a clear concise view of the monthly expenses for the entire family, it is now time to look at the actual income for the household. Next, you will want to break down the expenses into two categories, fixed expenses (house and car payments) and flexible expenses (such as phone, recreation). You may find that you are surprised at the amount of money that is spent on little impulse items through out the month. Keep in mind that with a well thought out budget those little impulse items or creature comforts can become a part of your individualized spending plan.
Now that you have a fair and accurate portrait of the household income and expenses, a savings plan can actively be set in place. For any plan or budget to work, it is important to remember that the tracking portion of the budget is of great importance and must not be overlooked. If you do not have an accurate view of expenses versus income every month, you will not be able to put together a successful budgeting technique the entire household can live with.
A few other items to keep in mind to ensure a successful budgeting plan is to keep a working idea of how you view your wants and needs for your future, to be able to live within your means while being able to explore ways to make living with a budget or savings plan a pleasant experience. Living on a budget does not have to mean having no fun or life without pleasure, it is quite the opposite the budget or savings plan allows you to take a more proactive role in deciding what activities you wish to spend not only time but money on.
