Budget is Not a Dirty Word

A budget is an itemized summary of your total monthly income after taxes minus your total monthly expenses - everything you spend money on.  A budget helps you determine whether you can spend money now or later.  A budget helps you prioritize your spending and helps you manage your money no matter what your income.

A budget is only restrictive if you don't have any extra cash left over after you pay your bills. Celebrities, athletes and the wealthy have budgets. They hire accountants to keep track of their money so why shouldn't you keep track of yours? 

Seventy percent of Americans live paycheck to paycheck and forty percent of Americans live above their means. This statistic shows there is a serious problem in America. 

When your budget is out of balance you use credit cards or risky financial options when causes you to go into debt and this can lead to serious financial problems such as foreclosure, bankruptcy, etc. If you know how much money you earn you should also know how much you spend.

How to Develop a Budget

1. Subtract monthly expenses from your monthly income. If the total is negative or less than 5% of your total monthly income that is a red flag that you need to make some major adjustments to your budget.
2. Track daily, weekly or monthly.
3. Keep all your receipts and reconcile your bank accounts.
4. Use an automated software tool, pen and paper or the envelope method.
5. Include some wiggle room.
6. Create short and long term financial goals.
7. Take accountability for your actions. Don't blame others for your financial situation.
8. Write down a list of at least 3- 5 financial goals. Develop an action plan and beside each debt write down steps on how you can achieve them.
9. Surround yourself with at least three people who are doing better financially and gain financial advice from them.
10. Don't keep making the same mistakes.
11. Seek professional help if necessary.

Benefits of a Budget

1. Helps you become accountable and responsible
2. Prevents you from spending more than you have
3. Reduce usage of credit cards
4. Shows you what you are doing now
5. Reduce fees (bounced checks, overdraft, over-the-limit, late fee, etc.)
6. Prevents arguments with your spouse or significant other and helps reduce blame
7. Helps you save money when making purchases because you don't have to worry about credit card interest and finance charges
8. Budgets are only restrictive if you make them restrictive and see a budget as something negative.
9. Prevents harassing calls from creditors
10. If you work all year or even part-time, spend time running errands, taking the kids to activities, invest in yourself and spend at least a few hours a week looking at your finances
11. A budget is needed even if you pay your bills on time.  The best athletes have personal trainers and coaches to help them remember the best, so if you want to get better with your finances start a budget

How Budgets Can Prepare You for Future Events

1. Is your financial roadmap
2. Helps to deal with unexpected expenses
3. What you do today will affect your future
4. Can help you plan for the future
5. Frees up cash to achieve financial goals