Budgeting Part 1

Creating a budget is pretty simple, but following it is a little more difficult. I recently received an email from a new reader wanting to know more about budgeting. I emailed her back with quite a bit of information that I hope will help her. I decided that a post on budgeting may be helpful to many of my readers, so here it is.

The first step to creating a budget is to track your expenses. If you have a money management program that you already use, this would be a great place to start. If you don't track your expenses, now is the time to start. Whether you do so with a computer program or a spreadsheet, or even if you use a notebook and a pencil, start now. I would suggest tracking your expenses for at least a week to see what you are spending on things like food and gas. Remember, you can always adjust your budget as needed. Your budget is not set in stone, and it should change often. I have created an Excel spreadsheet for you if you would like to download it. You can get 97-2003 or Excel 2007. (highlight file you would like to download and click on More then Download)

You will also need to list all your regular monthly bills. These are bills like rent or mortgage, insurances, car payments, utilities, credit cards, etc. To make my life easier, I take advantage of the free bill pay through my credit union. There are numerous advantages to using online bill payment. I set up my bills to be paid once a month, once a week, or they have several other payment options. I can set up one-time or recurring payments. I save money on stamps and my payments are never late, therefore no late fees. I can put in bills to be paid (for example $83 a month to NYSEG) and not have to worry about that bill again unless the amount changes. It really is a win-win situation.

You will want to either use a spreadsheet program (like Excel or Microsoft Works Spreadsheet) or a notebook and a pencil. I prefer to use a spreadsheet because it is easier to change things easily, but you can use whichever you prefer. Now is also a good time to write down your goals. What is it you would like to accomplish financially? Do you want to pay off your credit cards or save towards a home? Put this in writing(or use Excel or Word). You can even keep your goal list on your frig to keep yourself on track.

After you have done all of these steps, you are now ready to start creating your budget. I will continue with Part 2 of Budgeting in my next post. Look for it, and please leave me any questions or comments you may have