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Getting Started With Your Personal Budget

Most information sources you look up regarding financial management, whether these are online resources, help books, or even consultations with financial planners, will focus on or stress the importance of making a budget for your income and expenses.

Debt consolidation and management planners also begin much of their advice with creating a budget for their clients, in order to make the income and expenses more clearly laid out and structured.

What is the importance of a budget?

A lot of people may argue that while they do not necessarily have a written budget, or they do not make use of budgeting software or tools such as Quicken, they are able to stay on top of their expenses without overspending.

However, these same people often have no idea how much money is going and and might have a vague idea of what is coming in. Using a budget is beneficial for so many individuals or families who need to have a clear idea of how much income is coming in on a monthly basis, the  expenditures that this money goes to, and how much savings are being set aside.

Getting Started On a Budget

What is the goal of your budget?


If it is your first attempt at planning a structured budget, your goals and purpose for doing so should be well-defined first. Are you adhering to a budget in order to maximize income and have more savings monthly?

Or is the budget your first step to reducing debt and eventually achieving financial freedom? If your purpose for the budget is clear-cut, then you will find it less of a challenge to follow the budget to a T, which as you will find out can be quite difficult as you pare down unnecessary expenses.

Examine your current financial standing

Start with an honest and transparent assessment of how much income you get every month. This applies whether you live by yourself, with a spouse or partner, or have a family with several earning household members.

If the monthly income is not set, you can just estimate the average amount; do not include bonuses, tax refunds, and other additional income that are not received regularly. Do, however, factor in regular earnings from part-time jobs.

Use budgeting tools

Make use of helpful budgeting tools that allow you to just enter your financial information and easily keep track of your expenses. Quicken is one of the more popular software options for personal finance management tools (quicken.intuit.com for more information).

Software programs usually ask you to assign your expenses under specific categories like “clothing”, “health insurance” or “groceries”, so you really see where your hard-earned money is going.

Free Budget Worksheets

There are also plenty of free online budgeting resources such as the Budget Worksheet designed by the National Foundation for Credit Counseling (NFCC). You can get the worksheet from www.nfcc.org/financialeducation/monthlyincome.cfm, enter the required information, and the worksheet automatically calculates income and expenses for you (you can even print out the worksheet). Similar budget worksheets or templates can be found on www.budgetworksheets.org, and you can even create your own.

Use your budget as a map

Once your income and expenses have been assessed, define your priorities and figure out which expenses can be reduced or even eliminated. A budget allows you to see the many things you pay for monthly that can be done away in order to maximize savings, or be allocated for other more important things, or simply so you can end the cycle of a paycheck-to-paycheck existence.

Don’t budget away fun!

Sticking to a budget is not as simple or easy as it sounds, so be prepared to make a lot of adjustments to your spending habits and avoiding situations that foster impulsive expenditures. When creating your budget, it is also important to allow some wiggle room for your personal interests or hobbies.

There is a tendency to completely want to eliminate entertainment expenses or costs for hobbies such as sports, travel, or fine dining, but these little pleasures can also be included in your budget as long as they are planned and not excessive.

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