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As costs keep rising and paychecks seem to shrink, everyone is becoming budget conscious these days. And many people are finding themselves forced to budget for the first time. If you're one of them, you may be discovering it's a painful process.

The reason for budgeting is because you can't afford everything you want. And therein lies the pain. Though giving up some things you may have become accustomed to is uncomfortable, it's necessary in order to be able to afford the things you need. And for some, the "wants" are so powerful they can magically turn into "needs." When that happens it becomes impossible to match the income to the outgo.

Many of us naturally approach budgeting by making a list of the things we'd like to spend money on each month; then we start crossing items off the list until the total finally equals the paycheck. That may not be so hard when the items being crossed off are obvious luxuries such as dinner out and a movie on Saturday night.

But when a job loss or an illness takes a serious bite out of our income, we find ourselves quickly moving from cutting the fat out of the budget to cutting the meat, or even the bone. A form of grief sets in as we face losing so many things we've become accustomed to, and even a paralysis that prevents us from being able to decide between what we really need versus what we want.

When this happens, it's time to take another approach to budgeting to get us over the grief and paralysis. Instead of getting rid of items in an existing budget, which is a destructive process, try building a budget from scratch, which is a creative process.

Much like packing for a trip, you don't go to your closet and decide what not to take. You go to your suitcase and decide what to put in it. You're clearly focused on being sure you pack the things you need.

Starting with your existing budget or a list of typical monthly expenses you've compiled, pick the one thing that you must have if you can have absolutely nothing else. That becomes the first item in your new budget. Now, of everything that remains, if you can have only one, which one is it?

The first few items will be easy. Rent and groceries top the list. The next few may not be that difficult either. But soon enough, you'll have only so much left to spend.

When there's room in the suitcase for only one more thing, which do you really, really need?

After completing this process, it's entirely possible that you still have something left you need to pack.

Let's say for instance that you ran out of budget before you could include tuition and books for the evening college classes you're taking. This is obviously not a necessity but you can argue you need to finish that degree to get a better paying job.

It may not be necessary to take anything out of your budget if you can find ways to lower the cost of some of your preliminary budget items. For example, could you lower your food budget using coupons, buying in bulk, and eating more skillet dinners? Could you change car insurance carriers and reduce your automobile insurance? Seriously examine each item in your budget, asking not whether you need it, but asking whether you need that much of it.

These approaches will help you think about your needs differently and assist you in getting as many necessities as possible to fit within your resources.

Learn more about this author, Steve Holder.
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